Posted by John Katitus on January 13, 2001 at 02:14:03:
There are no two persons’ ideas I would have appreciated more than Jim Piper and John Hyre. It’s great to see you are both finding time to read the board and comment.
I guess the breaking point is how much itemizing deductions and adding the interest and property taxes deductions exceeds the standard deduction. We know this is depends on the specific buyers tax position.
I don’t have a feel for that, since, I believe in theory, anyway, that the standard deduction is geared to be equal to that which a married couple with 1-2 children itemizing would be. The best way to know for a specific family would be to have a Turbotax return and do it both ways. If the family were in the 28% marginal tax bracket, and assuming a 5% State tax, they would save 33% of whatever the overage would be. On a $900 payment, mostly interest, that’s $300 per month.
Your question about splitting the savings. I have read Jim’s posts regarding Bill Gatten’s PacTrust’s. Those address the same situation: a buyer that pays for and deserves a tax deduction. Bill cites this as one of the advantages to his proposal. Similarly, if you can show the buyer that he can save $250+ dollars per month, depending on his specific tax situation, he shouldn’t have too much problem paying $100 more monthly.
Thank you for your comments.