Question

If the rent on an apartment is $600 per month, which is equal to a mortgage payment on a house, how much additional tax savings will you realize if $200 of the monthly mortgage payment is interest and your tax bracket is 25 percent?

A) $50
B) $600
C) $2,500
D) $7,200

Answer 1

The additional tax savings will be $50 if $200 of the monthly mortgage payment is interest and the person is in a 25 percent tax bracket.

Step-by-step explanation:

If the rent on an apartment is $600 per month, which is equal to a mortgage payment on a house, the additional tax savings realized if $200 of the monthly mortgage payment is interest and the tax bracket is 25 percent can be calculated as follows:

Tax savings from mortgage interest = Interest amount x Tax bracket

Tax savings = $200 x 0.25

Tax savings = $50

Therefore, the correct answer is A) $50.