2007-01-26 08:20:44 · 16 answers · asked by yappy 1 in Business & Finance ➔ Taxes ➔ United States
Property taxes will change only if the value of the home changes. You will lose your mortgage interest deduction on your income tax - but you won't pay additional taxes just because your home is paid off.
2007-01-26 08:27:44 · answer #1 · answered by lifesajoy 5 · 2⤊ 0⤋
1) Capital gains tax - this can only apply if the property is sold - you haven't indicated that you're selling, so this doesn't apply.
2) Property tax - will only increase if the value assessed is increased; it probably won't go up much next year if at all. Again, paying off your mortgage doesn't affect this.
3) Income tax - you'll lose the ability include in your itemized deductions the interest that you've been paying on the loan, which could be anywhere from almost nothing to over $7,000. I can't tell you how much this is without knowing more about the terms of the loan, i.e., how much the original loan amount was for, how long you've had the loan, the interest rate, etc. However, keep in mind that the longer you've been paying on the loan, the less interest you're paying each year.
2007-01-26 08:48:33 · answer #2 · answered by Marko 6 · 0⤊ 0⤋
Paying principal does not affect taxes. However, since you will not be paying interest on the 118,000 you will not be able to take a deduction for interest.
Assuming you had a loan at 7% that would be about $8000 of interest that is not deductible. If you are in a 35% bracket, you would pay about $3000 more taxes next year than you did this year.
On the other hand, you saved $8000 given to the bank.
2007-01-26 08:32:44 · answer #3 · answered by ignoramus 7 · 0⤊ 1⤋
Your taxes next year, as in any year, would depend on your income, number and age of dependents, adjustments, and deductions.
Paying off the house this year would mean that starting for the 2008 tax year, the one you'll file in 2009, you wouldn't have a mortgage interest deduction, so would probably take the standard deduction instead.
2007-01-26 09:22:29 · answer #4 · answered by Judy 7 · 0⤊ 0⤋
What taxes are you talking about? If you're talking about income taxes, the only affect paying off your house will have is that you will no longer be able to deduct the interest, as there won't be any. Losing this deduction may make you unable to itemize deductions, which may cause you to have an increased tax liability.
2007-01-26 08:29:37 · answer #5 · answered by Insurance Biz CT 5 · 1⤊ 0⤋
When you do your taxes this year, do a trial run without the mortgage interest. If you and your husband keep the same level of income for the coming year your refund or payment will be about the same next year when you file.
2007-01-26 08:31:24 · answer #6 · answered by Billy FZ1 5 · 0⤊ 0⤋
More important is how much interest you will save(not have to pay) next year!!!!
Your taxes will be the same...property taxes...
If you worried about the tax deduction from the interest...don't...if you want the deduction donate what you wold have paid in interest to charity!
2007-01-26 08:58:16 · answer #7 · answered by Anonymous · 0⤊ 0⤋
There's not enough info in your question to answer this. You won't have any mortgage interest deduction to claim next year, so that's one thing to keep in mind. But other than that, paying off your mortgage isn't going to incur any tax liability.
2007-01-26 08:31:50 · answer #8 · answered by rosecitylady 5 · 0⤊ 0⤋
You will not owe any extra taxes for paying off your house. You will lose your mortgage interest deduction, but you will save more in interest than you will lose on your deduction.
2007-01-26 08:30:10 · answer #9 · answered by J.R. 6 · 0⤊ 0⤋
YOur property taxes should not differ too much except for natural inflation and creep. The fact it's paid for won't change anything by itself.
2007-01-26 08:29:14 · answer #10 · answered by snvffy 7 · 0⤊ 0⤋