This chart provides an example of the tax savings enjoyed by many real estate owners. It calculates the deduction a buyer could take if they purchased an $800k home with 10% down and if their gross income was a $120k per year. This is relatively realistic example for San Mateo county and certainly happens everyday in communities like Redwood City and San Carlos. Please consult a tax advisor before buying real estate so you can understand the impact a home purchase can have on your specific tax burden and the savings it could offer you.

The first part of this analysis calculates that the homeowner tallies up a total of $50,959 in tax deduction savings for the year from their mortgage interest and property taxes. By subtracting the deductions from their gross income, they are then taxed on a lower amount. This leads to a tax savings of roughly $19,365 for the year vs. a renter with equal income. If they did not own real estate, the $19,365 savings is money the buyer would have ordinarily been required to pay the IRS and State government!

There are other tax savings to be had when someone purchases investment real estate and we go into these examples in our real estate investors sections of this website.

THIS IS AN EXAMPLE FOR ILLUSTRATION PURPOSES ONLY

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