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Does NYTimes buy or rent calculator... calculate mortgage interest deduction?
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2011 Mar 23, 5:00am 968 views 1 comment
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LAO
2011 Mar 23, 7:00am
In 30 years, you’ll come up a millions ahead vs. maybe 10 thousand wasted in if there is no appreciation)
Thx for the info... Until i punched the numbers into my TURBO TAX this year I didn't realize how much tax benefit owning a home really is in CA. Even your CA State taxes drop a good bit! That might be partly because I recently got married and my wife isn't working.. which alone gives me a very large federal tax break.
A quick and dirty formula I've found for calculating my tax refund on a home purchase is taking the yearly mortgage interest + property tax and multiplying it by 25% (marginal tax rate). And that gives me a good indicator of my refund....
I'm seeing this home purchase as a "starter home" for us... (i know that term is over-used by realtors). A $330K home with 10% down won't stretch us a bit with my current salary. It's a little under 3x my current income. In 5-8 years my wife should be done with her schooling and a few yeas into a solid healthcare career... We should have a child starting elementary school and depending on how the LAUSD schools are doing we might want to move up to a better district... Right now the elementary school in our zone is an 8/10... then a few blocks away they are 5/10... who knows what will happen to them in 5-8 years though. I'm comfortable with an 8/10... but 5/10 scares me a bit. It's LAUSD granada hills area we are house shopping by the way.
Most of the homes in the area are down 40% from the peak.... It's got the Granada High School Charter, a very successful charter school, in the area (they just won the CA state academic decathlon last week i believe) , which I think it setting a solid floor on home prices moving forward.
I punched in my some numbers... my current rent at $1700 a month. Vs. buying a $330K home with 10% down.
Even with $0 for maintainence/renovation costs.. It still says it's only better to buy after 5 years minimum... the first 4 years I'm supposedly losing money owning.
But when i run the numbers myself... I get a much different picture. I calculate that my current rent of $1700 a month is very close to a $330K mortgage at current rates after my mortgage interest and property tax deductions. I got pre-approved for a $390K loan recently with 10% down..interest rate of 4.875%, but i ran the same numbers on a $330K home. Entered a full years interest deduction and tax deduction into TURBO TAX as if i bought the home this past year and I got a whopping $5000K tax deduction. That's $416 a month... which basically covers my property taxes and insurance... All I'm actually paying is the mortgage/interest + PMI...
Which works out to my rent pretty much.. $1571 mortgage/interest + $150 PMI = $1721 a month out of pocket.
Plus I'm building $4482 in equity the first year and up each year after...(assuming home prices stay flat).
So how does NYTimes calculator assume renting is still better than buying for 5-10 years?
#housing