With the new law made by trump what is the deduction in income tax possible for a mortgage amount of say 800k in king county wa? I was trying bankrate, but unsure what to put in as fed and state tax rates (married filing separately)? I think fed is 33% for income of 200k, but unsure if i reading the values right. I am interested in finding how money money i can deduct from my taxes each year.
Trump did not "make the law." He proposed new tax legislation and Congress passed it. I don't think Biden will propose legislation to change the SALT tax limitation. What this means is $10K is the most you can deduct in combined property tax, sales tax and state income tax. Of course, there is no state income tax in WA so enter zero in your bankrate calculator. The deduction for your mortgage interest is a different category.
Interest rate x amount borrowed (capped at $750k) You’ll likely hit SALT limit of $10k with property taxes and the sales tax deduction in Washington state Married couple may be able to get to $35k all in. Standard deduction is $12,400 per person or $24,800 married filing joint. It only makes much difference if you have other deductions.
So basically jumbo loans are capped. 750k limit. Fed i think is 33% based on 200k income married and filing sep. What is the state tax rate to put in, i xouldnt figure that out. Per bankrate, the savings i. Taxes in first year is 22k, which is ridiculously high, and unbelievable. But it might be true if they are not considering the SALT(bug?).
$22k is way too high. That’s probably just the interest paid per year. Assuming $750k mortgage and 3% interest rate, you are looking at $22,500 deducted. Add in $10k for SALT (property tax will hit this if over $1 million but even if a bit lower you will get $2-3k for sales taxes as Washington has no state income tax). That adds to $32,500. But you’re already getting $24,800 for standard deduction today. Difference is $7,700 more deducted. You’d be looking at 33% of that which is only about $2500 saved. If you were already donating say $10k to charity each year. You’d have been getting no tax break because it is below the standard deduction. But now you would save an additional $3,300 per year. So like I said, the value comes more if you have other deductions since you’ve now passed the threshold for standard deduction.