Question

The decision of whether to rent or buy housing is a personal decision that is based on both your lifestyle and your finances. While most financial experts argue that the financial aspect of the decision is important, it is also important not to base your rent-or-buy decision solely on the numbers. Your personal needs and housing market conditions are important.
However, it is still necessary to perform the financial analysis. Before you conduct a rent-or-buy analysis, it is critical that you understand how the U.S. tax code creates tax shelters for homeowners.

The tax deductibility of the interest ____________ on a mortgage and the__________ incurred on your home create a tax shelter for the___________ , which ____________your taxable__________ and tax liability.

The standard deduction for mortgage interest under the 2014 U.S. tax code is:

a. $5,900 for single individuals and $11,800 for married couples filing jointly
b. $12,600 for single individuals and $6,300 for married couples filing jointly
c. $6,300 for single individuals and $12,600 for married couples filing jointly

Answer 1

Answer:

Rent or Buy Housing and the U.S. Tax Code

The tax deductibility of the interest ___paid___ on a mortgage and the___costs__ incurred on your home create a tax shelter for the___taxpayer___ , which ___reduces___your taxable__income__ and tax liability.

The standard deduction for mortgage interest under the 2014 U.S. tax code is:

c. $6,300 for single individuals and $12,600 for married couples filing jointly

Explanation:

Currently, the IRS allows taxpayers to deduct home mortgage interest on the first $750,000 ($375,000 if they are married but filing separately) of their indebtedness.  However, higher limitations ($1 million) or ($500,000, if married but filing separately) apply if the taxpayers are deducting mortgage interests from their indebtedness incurred before December, 2017.