Once again, please feel free to have us help sell your clients on the benefits of buying. For example, we have a client buying a house with an in-law unit for $737,000. The client is currently paying rent of $2,300 and he had very cold feet about increasing his housing payment to $4,000 (the principal, interest, taxes and insurance associated with the purchase of a $737,000 home with a 20% down payment). He was taking into account the rent from the in-law unit that is currently rented for $1,300 per month, but he was not taking into account the enormous tax benefits he will reap from this purchase.
Our client will not only get the $8,000 homebuyer’s tax credit that we have discussed many times, but he will be able to deduct ALL of the Interest and Property Taxes from his “taxable income”. Interest and Property Taxes for this purchase will total approximately $38,000 per year, resulting in Tax Savings of over $16,500 per year (the client is in a combined 44% tax bracket). This works out to an additional $1,300 to $1,400 in tax saving every month. We instructed our client to adjust his withholdings in order to take home more pay to take advantage of the tax savings as soon as possible.
In any case, after rent from the in-law unit and tax savings, our client’s Net Payment is between $1,300 and $1,400 per month. And, even without the rent from the in-law, our client’s payment would only be slightly higher than his current rent. Needless to say, after understanding all of this, our client is ecstatic and chomping at the bit to close.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167