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Hello,

What would be more beneficial with reference to taxes; sheltering %10 of a $30,000 income through a 401(k) plan or buying a house? I live in Ca. Would like a house--don't really have to have one. All the other ideas to the side, I simply want to know the bottom line when we compare the two.
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What would be more beneficial with reference to taxes; sheltering %10 of a $30,000 income through a 401(k) plan or buying a house? I live in Ca. Would like a house--don't really have to have one. All the other ideas to the side, I simply want to know the bottom line when we compare the two.

The mortgage interest deduction will probably save you more than the 401(k) contribution, but it depends on the amount of the interest and your other itemized deductions. To do the calculations, get yourself a 1040 and a Schedule A and run the numbers both ways.

Before you do that, though, consider this. I don't understand the question. You're talking about two entirely different things: saving for your retirement and buying a house. Current tax savings are, to me, a minor consideration in determining which of those I should allocate money to.

TMF ExRO
Phil Marti
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