Thoughts and choices
If you are trying to decide to take standard tax deduction or itemize when filing your income tax return, you need to look at what gives you the highest return. Most people that make over $75,000 a year itemize their deductions, but with lower interest rates is this wise?
For 2012 a standard deduction of $11,900 is available to married couples and $5,950 is available for singles. These are standard deductions that every person can take. So this is the minimum that you should expect.
Now let’s look at the numbers. If you are married filing jointly and you have a $150,000 mortgage with a 3.5% interest rate, the standard deductions would give you $2,650 larger deduction than itemizing. In this example you would have paid $9,250 in interest and property taxes versus $11,900 for the standard deduction. Let’s say the couple was in a 28% tax bracket, then they would have saved $742 using the standard deduction.
In the past mortgage interest rates were higher in the Fairfax VA Real Estate market, so your taxes and interest rate would have been much larger and it would have been automatic for you to itemize your deductions.
Today you should really analyze whether this is beneficial. Also you need to consider your other deductions. Medical expenses, losses, contributions all need to be considered, because you add them to your itemized mortgage interest, so you need to talk with a Tax professional that can compare your itemized versus standard deductions. If you have questions about the Fairfax VA Real Estate market, please contact me.
You can consult a tax advisor and see http://www.irs.gov for more information.
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