Im single and with parents.At my new job I pay about $10K/year in tax, whats my refund? Should I buy a house?

Question

Living at my parents and being single I am sure that most of the money that I wil pay for taxes will be lost or I might even end up paying more when It is time to file. Would buying a house and living independently get me more money back, and if so about how much? I make between 60-100 K a year

Answer 1

Interest on the house payment is deductible and that should decrease your tax burden, But insurance and prop. taxes might make up that savings. It is still a good idea to get a house. Check you liquidity and securtty of job.

Answer 2

Buying a property normally reduces ones tax burden. With the appreciation as well as the tax benefits of home ownership, I would purchase a house.

I recommend the purchase of a duplex, or 1-4 for the income stream in helping with the mortgage and the tax advantage. If you can not handle the tenant problems just go with a single family home. An income producing property will go a long way toward retirement and appreciation as well as the depreciation that is tax deductible on the rented unit. Duplexes and 1-4 units are treated as a single family home for financing purposes.

No matter the housing situation presently 5-10 years from now you will be, in my opinion, better off by purchasing your home.

You might consider some tax deferred IRAs also to assist with your tax burden, coupled with your real estate should go a long way toward helping with your tax burden also. With a little moving around of a few assets you might find that it makes a whole lot of difference.

For tax deferred instruments check with a local broker for advise.

For tax information you might want to consult your CPA or tax consultant.

Answer 3

A lot of folks would purchase a property to utilize the tax benefit of deferring the amount of interests when filing tax return. It doesn't always work, because not everyone benefits to itemize their tax return.

For example, if a property costs $100K and after 20% down, the loan would be $80K. If the interest rate on the mortgage is 6%, then total amount of interests you paid is $4800, which is probably smaller than your standard deduction on Federal Tax level.

The case is stronger, if you participate in other retirement programs. Such as 401K, where you can defer up to $14,000. IRA only allows $3000, but it is additional to your standard deduction.

Please consult with your CPA or tax account, but not the realtor or agents, whom are known for overstating benefits to earn your commission.

Finally, this is a good article when you want to put in bid, negotiation. http://biz.yahoo.com/brn/060909/19463.html

And this website, describe true value of a property during housing market correction: http://nobubble2006.blogspot.com/

As housing market continues to slump, it might be a good idea to wait.
http://money.cnn.com/2006/09/08/real_estate/caught_in_the_bubble/index.htm?postversion=2006090814
http://money.cnn.com/2006/09/05/real_estate/Ofheo_home_prices/index.htm?postversion=2006090514

Answer 4

$60-100k a year and live rent-free??? WHAT A DEAL???

Buying a house for the sole reason of income tax deduction is not a good plan. Read Dave Ramsey's book "The Total Money Makeover" at www.daveramsey.com

Good Luck