Lake of the Ozarks – Tax Benefits of Second Home Ownership
The tax deductions you’re eligible to take for mortgage interest and property taxes greatly increase the financial benefits of second home-ownership and makes Lake of the Ozarks real estate an attractive investment that can be enjoyed by friends and family. Here’s how it works.
You have a loan of $150,000 for 30 years, at 7 percent (yes, they are much lower than this right now, but they won’t stay that way forever). Your payment would be $997.95 per month. The first payment is made, $122.75 goes to pay down the principal amount of the loan, and $875 is interest paid for that month. You are allowed to deduct the interest portion of the payment (for this example we will keep the amount of interest paid at $875 for 12 months).
$10,500 = Mortgage interest paid
$ 1,200 = Annual property tax
$11,700 = Total deduction
Then, multiply your total deduction by your tax rate.
For example, at a 33 percent tax rate: 11,700 x 0.33 = $3,861
$3,861 = Amount you have lowered your federal income tax (at 33 percent tax rate)
Note: Mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.
Call John Garrett with any questions about Lake of the Ozark real estate. 573-480-6420.