If you’re thinking about buying a home, calculating your income tax incentives may help you make your decision. In these trying financial times, real estate is one of the safest investments you can make. A home is the biggest asset many of us have, and your mortgage payment is one of your best tax write-offs.
If you want to get a better idea of the kind of tax savings you can earn from your mortgage, there are several online calculators available. When you one of these calculators and fill in the required blanks, your tax savings is automatically calculated. You need to provide information such as the mortgage amount, interest rate, term of the loan, federal and state tax rates, and monthly payments. Most online calculators provide you with your tax savings for the first year of your mortgage.
You can find tax savings calculators that provide you with savings charts for the entire length of your mortgage loan. The tax savings decrease over time, but the total amount is usually quite significant when you write-off your home mortgage. The best online tax calculators allow you to break down your results according to the principle balance and monthly payments.
When entering data into an online calculator, the terms can sometimes be confusing. It’s a good idea to use a calculator that provides you with definitions and step-by-step instructions for filling out the form. When writing off your mortgage, you need to make sure that your itemized deductions exceed the standard deduction allowable. Most calculators also take into account closing fees, such as points paid and any origination fees.