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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127684  
Subject: Re: When can I qualify for a loan? Date: 4/26/2013 10:23 AM
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At $110K/year, (1) I'll be well into the 28% bracket, not 25%

At $110k/year, I would actually hope you won't be 'well into' the 28% bracket. With several missed years of retirement savings due to getting your PhD, I would hope that you would be maxing out your 401(k). In 2013, that would take $17,500 off your AGI, dropping it to $92,500. Assuming your annual medical premiums are, say, $2,400 ($200/month) will further drop your AGI to $90,100. Since the 28% bracket for 2013 starts at $87,850, you would only have $2,250 taxed at 28%, and most of your deductions would save you 25%. And for 2014 (when you would actually get your full year income), you may actually have even less income taxed at 28% if the 401(k) contribution limit increases or the tax bracket breakpoints increase.

This means I should get the full benefit of the property tax and mortgage interest deductions (~$1300 and ~$1600 off tax under your $200K assumption).

Wow, with a state income tax, you are still paying over $4600 in property taxes on a $200k property? That's 2.3% - I thought Texas, with no income tax, had high property taxes, and they were only about 2%. Washington, where I live now, also has no income tax, and the property tax that I just paid was about 1% of assessed market value (I am protesting my assessed valuation, since it was significantly more than I paid). When I lived in states with income taxes, the property taxes were generally less than 1% of the value of the home. That high of a property tax in a state where I also had to pay income tax would definitely be a disincentive to buying property, despite the benefit on my income taxes.

AJ
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