Question

Assume your home is assessed at $245,000. You have a $171,000 loan for 25 years at 6 percent. Your property tax rate is 1.4 percent of the assessed value. In year one, you would pay $10,260 in mortgage interest and $3,430 in property tax (1.4 percent on $245,000 assessed value).

Answer 1

Answer: $3,833.20

Explanation:

Mortgages interest and property tax are both federal deductions so they will reduce taxes:

= 10,260 + 3,430

= $13,690

The tax saving is therefore:

= 13,690 * tax rate

= 13,690 * 28%

= $3,833.20