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what does "without getting tax benefit" mean in this calculator for mortgage loan?

27ysq - 2009-03-08 17:48:04 - Renting Real Estate

please see this link which I used to figure how much house I can afford. http://www.thestreet.com/static/calculators/index.html?CALCULATORID=HF09TEMPLATE_ID=www.thestreet.com_2 the "show payment schedule without getting tax benefit"? What are they really asking here? How would I know if I were to get this or not? Thanks

Best Answer:

When you file a tax return, you have the option of itemizing. *IF* you can itemize your mortgage and property taxes, it would lower your taxable income and you would pay less tax. However, you only benefit to the extent the money is more than your standard deduction anyway. Plus if you lose your job, there is no tax benefit if you have no income.... When they give you a price range like this ($300K to $380K), use the lower one.

Answers:

When you file a tax return, you have the option of itemizing. *IF* you can itemize your mortgage and property taxes, it would lower your taxable income and you would pay less tax. However, you only benefit to the extent the money is more than your standard deduction anyway. Plus if you lose your job, there is no tax benefit if you have no income.... When they give you a price range like this ($300K to $380K), use the lower one.

What I feel they are saying is the amounts are based on varying tax situations. You get tax benefits for owning a home and depending on your income bracket, how you have your taxes done,etc. will determine the benefit. You would have to ask a tax person that has looked at your situation to tell you your exact benefit. However this kind of calculator is what got allot of people in trouble financially. Usually people base their affordability on real dollars but this has you going "all in" to get a home because they are counting on your tax refund to help you. Normally people that buy based on their actual budget end up with a nice surprise at tax time where with this approach it taps that out and has you maxed out. I know this wasnt part of the question but be careful with this type of approach unless you have allot of money in reserves. Good Luck