How do I figure out taxes if I sell my house and start renting?

[Anonymous]

I am considering selling my house and starting to rent for a little while. How can I figure out what kind of hit I would take in taxes from losing the interest deduction? Is there an easy calcuation (or even not-so-easy one)? Or do I need to pay a tax advisor to crunch the numbers for me?

[Anonymous]

Why not just use Turbo tax and factor in the standard deduction instead of itemizing and compare?

[Anonymous]

Anonymous wrote:I am considering selling my house and starting to rent for a little while. How can I figure out what kind of hit I would take in taxes from losing the interest deduction? Is there an easy calcuation (or even not-so-easy one)? Or do I need to pay a tax advisor to crunch the numbers for me?

Simple:

Look at your itemized deductions last year.

Subtract the amount of mortgage interest and any property taxes you paid. If what's left is more than $12,200 (the standard deduction for married filing jointly -- use $6,100 if you are single), congratulations, you will still be able to itemize. Multiply the mortgage interest and property tax amount by your top marginal tax rate. That's how much more in taxes you will pay annually. Divide by 12 to get a monthly estimate.

For example:

Your itemized deductions total $40,000. That includes $26,000 in mortgage interest and property taxes (the rest is state income tax, charity, misc.).

You pay in the 25% rate.

So, you will pay $6,500 more in federal taxes next year.