Problem 12-1
Rent Versus Buy Worksheet—Year 1
Estimated Tax Savings from Loan Interest and Property Taxes
1. Annual loan interest $13,458
2. Add: annual property taxes + 2,000
3. Equals: total tax deductions (line 1. + line 2.) 15,458
4. Multiply by marginal tax rate X .28
5. Equals: estimated tax savings from loan interest and property taxes $4,328
Estimated Proceeds from Sale
6. Estimated sale price $210,000
7. Less: estimated selling expenses - 14,700
8. Less: outstanding loan balance - 148,975
9. Equals: estimated proceeds from sale (line 6. – line 7. – line 8.) $46,325
