I do work a lot in the Inland empire so if you need any help or would like to know about the best properties in the area please let me know
First Team Real Estate
I am not a tax professional (and you should direct this question to your tax professional as they will be able to tell you exactly how much your tax savings will be), however, I do own a home and take the mortgage tax deduction each year on my Federal Income Taxes and I do work with First Time Homebuyers and help them get the most for the home buying dollar. So here is how it works, plus some special information if you are a first time homebuyer and qualify for a program called MCC.
1. Mortgage interest is currently tax deductible for federal income tax purposes, although there are limits and that is why you should speak with your tax professional about your specific situation. This is my generic example, very simplified so that the math is easy. Say you make $10,000 a year and your tax rate is 10%. You would be paying $1,000 a year in taxes. Now, say you make $10,000, you pay $2,000 in mortgage interest and your tax rate is 10%. You deduct the $2K from your income, so you will now pay taxes on $8,000, and at 10% that is $800 in taxes. You pay $200 less in taxes, so this is like the govt paying $200 of your house payment and you paying $1,800.
2. Now if you are a first time homebuyer and you qualify for MCC of 15%, you get a tax credit, not just a tax deduction. Now you make $10,000, pay $2,000 in mortgage interest and your tax rate is 10%. You get to take 15% of your mortgage interest as a tax credit (or $300 in tax credit and $1700 as a tax deduction). Deduct $1700 from your income and pay tax on $8,300 or $830 in taxes, less a tax credit of $300, which means you pay only $530 in taxes. This is like you paying $1,470 in house payments and the govt paying the rest.
Remember this is just a simple example, not an actual scenario. I would be happy to help you find a mortgage professional and/or tax professional who could give you more specific information. When you are looking to buy a home, these are very important components of Your Dream Team, along with a good Realtor who will listen to what you want and help you find it. Contact me if you want some referrals.
I wish you all the best in finding a great home at a great price, and Dare to Dream.
Real Estate Consultant
RE/MAX Palos Verdes Realty