4 ms·
Any itemized deductions have to add up and pass the standard deduction. Thats normal, but they add up. With that said, as a lot of people said, in high cost ar
by shados 9y ago
Any itemized deductions have to add up and pass the standard deduction. Thats normal, but they add up.
With that said, as a lot of people said, in high cost areas, it goes really quick, especially if you add municipal taxes which can also be deducted. So if you have 500 bucks a month in municipal taxes (which is kind of low in high cost areas), you're already halfway there. Add the interests (often half of your mortgage payments), and you're well beyond.
If you're in an area with million dollar houses being quite common (we are talking about the rich poor gap after all), you're talking about a 30-40k deduction easy, and even more for super rich.
One thing beyond that (any accountant in the crowd correct me if I'm wrong), the mortgage interest deduction for your primary residence is special in that it is one of the deductions that can be applied to AMT. So again, it helps the ultra rich.
I'm no 1%, but I am affected by AMT, and my place is in a high cost area, and this tax deduction is the only thing saving me from crapping my pants every year when I file my taxes.
- ww520 9y ago500 dollars/month for municipal taxes? Can you elaborate on those? I might be missing these deduction in the past.
- wnissen 9y agoSome places have city or county income tax, usually a few percent.
- lotsofpulp 9y agoProperty taxes. Can count on it being at least 1.5% to 2.5% in high cost of living areas. On an $800k house, that's in the $15k to $20k region per year.
- ww520 9y agoI see. Isn't property tax collected by the counties go up to the state? I thought municipal taxes are the ones collected by the cities and used by the cities.
- lotsofpulp 9y agoI'm assuming that shados was using the term "municipal tax" to refer to property taxes. If not, then I'm not aware of any other type of large common tax that could referred to as municipal tax relevant to this discussion. Property tax is also for local use, such as schools, police, and city/county departments. Taxes for the state are mainly state income tax and state sales tax.
- shados 9y agoCorrect. While I live in the US, english is absolutely my second language. I meant property taxes :)
- deleted 9y ago[deleted]