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Reply to "First return after buying house- How much did you get back ?"
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[quote=Anonymous][quote=Anonymous]Tax refunds are essentially interest free loans you make to the government, so they're not something you should look at as a good thing. The ideal tax bottom line IMO and my accountant's, is to owe about $500 or less so you won't have to do estimated payments next year, but you also haven't been giving the govt. the use of your money for free (at no interest). If you get a big refund adjust your withholding so that you will not overpay so much next year via withholding. Tax refunds aren't "gifts" or manna from heaven, they're your money coming back to you after not growing for as long as the govt. has held it. [/quote] Maybe back when you could earn 5% or more interest on your money that advice was worth something, but these days interest on $1,000 for a year probably would buy you 2 first class postage stamps (but some people are pretty happy to find they've saved a chunk of $). OP, one way to think of it is if owning a house is the only thing that changes on your taxes, then you are basically adding a tax deduction for the loan interest and taxes you pay. For a 30 year mortgage at 3.5%, roughly 2/3 of your PITI would be tax deductible, so if your PITI was $1500, and you are paying a 25% tax rate, then roughly $1000 would be deductible, 25% of which ($250 per month) you would get back on your taxes. Of course that's very rough but it might give you a sense.[/quote]
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