HOW MUCH INTEREST DO YOU REALLY PAY?
Less than you think.
People sometimes hesitate to buy real estate because of escalating interest rates. Many of them do not understand that the actual cost of a rate increase is not as great as it may appear on the surface.The appreciation in value of real property may compensate for the higher loan costs, but the chief benefit to most purchasers is that interest paid is tax deductible. The accompanying chart indicates the approximate net cost, after taxes, of interest for persons in various taxable income brackets filing a joint return."Lets wait" may be the most expensive words you ever say.
JOINT RETURN TAXABLE INCOME
|
Loan
Interest
Rate
|
$34,000
or
Less
|
$34,001
to
$82,150
|
Over
$82,150
|
|
|
After-Tax Cost of Interest Paid
|
|
7%
|
5.95%
|
5.04%
|
4.83%
|
|
7.25
|
6.16
|
5.22
|
5.00
|
|
7.5
|
6.38
|
5.4
|
5.18
|
|
7.75
|
6.59
|
5.58
|
5.35
|
|
8
|
6.80
|
5.76
|
5.52
|
|
8.25
|
7.01
|
5.94
|
5.69
|
|
8.5
|
7.23
|
6.12
|
5.87
|
|
8.75
|
7.44
|
6.3
|
6.04
|
|
9
|
7.65
|
6.48
|
6.21
|
|
9.25
|
7.86
|
6.66
|
6.38
|
|
9.5
|
8.08
|
6.84
|
6.56
|
|
9.75
|
8.29
|
7.02
|
6.73
|
|
10
|
8.50
|
7.20
|
6.90
|
|
10.25
|
8.71
|
7.38
|
7.07
|
|
10.5
|
8.93
|
7.56
|
7.25
|
|
10.75
|
9.14
|
7.74
|
7.42
|
|
11
|
9.35
|
7.92
|
7.59
|
|
11.25
|
9.56
|
8.10
|
7.76
|
|
11.5
|
9.78
|
8.28
|
7.94
|
|
11.75
|
9.99
|
8.46
|
8.11
|
|
12
|
10.20
|
8.64
|
8.28
|
|
12.25
|
10.41
|
8.82
|
8.45
|
|
12.5
|
10.63
|
9.00
|
8.63
|
|
12.75
|
10.84
|
9.18
|
8.80
|
|
13
|
11.05
|
9.36
|
8.97
|
|
13.25
|
11.26
|
9.54
|
9.14
|
|
13.5
|
11.48
|
9.72
|
9.32
|
|
13.75
|
11.69
|
9.90
|
9.49
|
|
14
|
11.90
|
10.08
|
9.66
|
|
15
|
12.75
|
10.80
|
10.35
|
|
16
|
13.6
|
11.52
|
11.04
|
|