tax benefits of home ownership

Excuse my naivete, but I'm trying to decide whether to buy or lease my
apartment.

A) If I take out a $1 million mortgage to buy my apartment at 5%
interest rate,
this means my annual interest expense is $50,000.
Thus, I can deduct $50,000 from my income tax and save about 40% x
$50,000 = $20,000
per year in taxes. True or false?

B) Can I also get an additional depreciation deduction on income tax?
Like, can I depreciation my
apartment by $100K per year to save $40,000 in taxes?

C) Suppose, instead of living in the apartment, I rent it out to
somebody else. Can the landlord get the mortgage tax deductions (or
depreciation deductions) in scenario A?


Ms. Shanadu

Re: tax benefits of home ownership

In article <>,
wrote:

> Excuse my naivete, but I'm trying to decide whether to buy or lease my
> apartment.
>
> A) If I take out a $1 million mortgage to buy my apartment at 5%
> interest rate,
> this means my annual interest expense is $50,000.
> Thus, I can deduct $50,000 from my income tax and save about 40% x
> $50,000 = $20,000
> per year in taxes. True or false?

True so far, but you are not finished yet. You get a "standard
deduction" just for being alive. If you itemize, you lose
that deduction. That is why you have to have so many deductions
in order to make it worth while. As a result, your net tax
savings is the $20K less your standard deduction.

In addition, there is not promise that the mortgage interest
deduction will stay around. You don't want to do a deal that
only makes sense based on tax deductions.

> B) Can I also get an additional depreciation deduction on income tax?
> Like, can I depreciation my
> apartment by $100K per year to save $40,000 in taxes?

Yes, if it is a rental or business property. If it is your
primary house, the answer is no. The IRS figures that you
have to live somewhere, and there is no free lunch on your
primary house.

> C) Suppose, instead of living in the apartment, I rent it out to
> somebody else. Can the landlord get the mortgage tax deductions (or
> depreciation deductions) in scenario A?

Yes, you can get the depreciation deduction. The home owners
mortgage interest deduction doesn't apply, but you can deduct
the mortgage interest as a business expense. The trick here
is that if you ever sell, you have to recapture depreciation.
The theory is that if you sell it for full price, there
really was no depreciation, so you have to give it all back.

-john-

--
============================================================ ==========
John A. Weeks III 952-432-2708
Newave Communications
============================================================ ==========

Re: tax benefits of home ownership

wrote:
> Excuse my naivete, but I'm trying to decide whether to buy or lease my
> apartment.
>
> A) If I take out a $1 million mortgage to buy my apartment at 5%
> interest rate,
> this means my annual interest expense is $50,000.
> Thus, I can deduct $50,000 from my income tax and save about 40% x
> $50,000 = $20,000
> per year in taxes. True or false?

False. If you're paying $1,000,000 for an apartment,
that means that the apartment is already
wired for nothing but the buisness concerns
of a T.Rowe Price Lawyer and the F.B.I.
Since that's the only way you're going to
get FEMA insurance on a $1,000,000 apartment.

So you're only saving any money if you're
also a big I.R.A. investor, rather than
a tax attorney.





> B) Can I also get an additional depreciation deduction on income tax?
> Like, can I depreciation my
> apartment by $100K per year to save $40,000 in taxes?
>
> C) Suppose, instead of living in the apartment, I rent it out to
> somebody else. Can the landlord get the mortgage tax deductions (or
> depreciation deductions) in scenario A?
>
>
> Ms. Shanadu

Re: tax benefits of home ownership

dude, new york city aparts START at $1 million dollars. a fancy apt
cost $15 million.

Re: tax benefits of home ownership

So is most new digs in San Francisco Bay or Boston Charles River.

Watch the AMT trap though.

Re: tax benefits of home ownership

wrote:
> dude, new york city aparts START at $1 million dollars. a fancy apt
> cost $15 million.

Dude, New York city doesn't have apartments or houses,
it got moron leftover IRA rollover shit from
Barbara Streisand and Micheal Jackson.

Re: tax benefits of home ownership

trump is building new $2 million dollar "starter" apartments for the
little guys.

I guess the hefty $2000/month maintenance fee plus NYC property taxes
would more than eat
up any kind of tax benefits one gets from ownership!

Re: tax benefits of home ownership

wrote:
> trump is building new $2 million dollar "starter" apartments for the
> little guys.

Trump is too stupid to actually build anything.
The Govenor of New Jersey gives hims a free
loner Leona Hemsley every other month,
just to make sure the idiot gets
some air time on the Jimmy Hoffa Channel.


>
> I guess the hefty $2000/month maintenance fee plus NYC property taxes
> would more than eat
> up any kind of tax benefits one gets from ownership!

Re: tax benefits of home ownership

trump just recently sold a set of apartments for a cool $2.5 billion
profit. His initial investment was
zero, because his Hong Kong partners put up the original money. Man is
a genius!

Re: tax benefits of home ownership

On 15 Aug 2005 17:25:17 -0700, wrote:

>trump just recently sold a set of apartments for a cool $2.5 billion
>profit. His initial investment was
>zero, because his Hong Kong partners put up the original money. Man is
>a genius!
Is he the genius or those he employs?