Question

Assume your home is assessed at $200,000. You have a $165,000 loan for 15 years at 8 percent. Your property tax rate is 1.3 percent of the assessed value. In year one, you would pay $13,200 in mortgage interest and $2,600 in property tax (1.3 percent on $200,000 assessed value). Assuming you are in a 28 percent tax bracket, by what amount would you have lowered your federal income tax

Answer 1

Answer:

$4,424

Explanation:

Calculation to determine what amount would you have lowered your federal income tax

Using this formula

Reduction in Federal income tax amount = (Mortgage interest + Real estate taxes) x Tax rate

Let plug in the formula

Reduction in Federal income tax amount= ($13,200 + 2,600) x 0.28

Reduction in Federal income tax amount=$15,800×0.28

Reduction in Federal income tax amount = $4,424

Therefore The amount that you would have lowered your federal income tax is $4,424