Tax Deductions never see like much to me?

[Silly Goose]

It just seems silly to pay $10,000 to get maybe $1,000 back when it is all said and done.

Someone here stated that you should buy the max house you can afford and finance it just to get the tax deductions.

I wonder if there is a calculator out there for this on which way a person would get ahead in life.
I would think if you were super rich, you would just buy in cash.

[acermill]

Why don't you get a larger refund ? Because not ALL of your interest is tax deductible. Think of it this way. If you pay neither interest and property tax (large deductions), you STILL get the standard deduction of about $11k if filing jointly and $5.5K if filing single. Your deductions ONLY count if you get over those thresholds. and they only count for the amount OVER those thresholds. I can beat the system a LITTLE bit, because I pay two years of property tax in one year. In the year I pay NO property tax, I end up with the standard deduction.

[Glenn S]

A homeowner gets back a whole lot more than a 10% tax deduction for home ownership, especially on the front end. First the homeowner writes off all the interest of the loan and all the property taxes.

Depending on the tax rate the borrower who pays any federal income tax minimally reduces their payment by at least 15-20%. Who in their right mind would walk way from having your housing payment reduced by that much. In addition, in most rental markets the cost of rent far exceeds the monthly payment of owning a home due to such low interest rates and a depressed real estate market.

I can't imagine anyone that has any type of home ownership and even a marginal retirement program (IRA) that would only take the standard deduction and not itemize. Most likely they are one of those in the bottom 45% that pay no federal income tax whatsoever.

Should add: Paying Social Security/Medicare is not paying federal income tax.

[BigDog507]

The real way to get ahead it to use someone else's money while investing yours at a better rate. Don't pay cash for anything, charge it. Then pay the bills off when they come due. This allows you to have your money for another month. With interest rates as low as they are now it really doesn't make any difference but when interest rates were 5-6% you could earn a dollar or two before you had to pay the bill. If you buy a large ticket item and finance it at 6% and can invest the same amount of money at 10% your net gain is at least 4%. Make what money you have work for you.