Posted by Dave T on January 19, 2000 at 10:38:49:
You say that the mortgage payment will be more than the buyer’s current rent. Mortgage interest and property taxes are allowed deductions but they only offset current income. If your buyers are in the 15% tax bracket, their true tax saving would only be 15% of the deduction in excess of the standard deduction.
In order to get that tax savings, the buyer still has to spend the dollar to get 15 cents in tax savings. On an after tax cash flow basis, the buyer is 85 cents in the hole.
I wouldn’t even try to convince your buyer that their tax deductions will leave more after tax dollars in their pocket than if they were renters. Instead educate your buyers to the value of equity buildup and property appreciation. For a little more than their rent each month, your buyer is vesting in the future profit in the property through ownership.