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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 10359
Experience:  Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
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I am selling my house and carrying part of the loan. I have

Resolved Question:

I am selling my house and carrying part of the loan. I have a pension as a CA teacher of 1895 a year and social security of 271 . Payments to me will be approximately 800.00 per month that will include the 4% interest. Can you give me a ball park estimate of my increased tax liability since I will no longer have my house as a deduction.
Submitted: 9 months ago.
Category: Tax
Expert:  Megan C replied 9 months ago.

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

How are you today?

MyVirtualCPA :

How much of the $800 payment is considered interest?

MyVirtualCPA :

Also, I assume you get $1,895 per month from your pension and $271 a month from SS, those are not annual figures...

MyVirtualCPA :

I can tell you how much the tax would be on the interest, if I had an amortization schedule. What you would have to do is take the portion of each payment that is attributed to interest and add that together. That's your income for the year. Then apply that to your marginal tax rate and that's your tax on that part of your return

Customer: 4% of it will be interest. Sorry to not be more clear. Those Are figures for my monthly income..........plus about 1000 a yr on dividends from 2 Realestate trusts
MyVirtualCPA :

So, 4% of the 800 is interest?

MyVirtualCPA :

somehow that doesn't seem right, because you would only be getting $384 a year from interest

MyVirtualCPA :

what's the principal and term of the loan?

MyVirtualCPA :

I will need to know the principal and term of the loan, so that I can calculate the interest amount - and then we can go on to calculate your tax liability.

Customer: So what is my marginal tax rate. Taxes already come out of my pension. The interest for the first couple of years will run about 4700 dollars. I am old and need you to tell me if this is financially okay for me or at least give me some idea
MyVirtualCPA :

Okay ...I will find your marginal rate - your marginal rate is the rate of tax that is charged for your last dollar of earnings

MyVirtualCPA :

Are you married filing joint, separate, or single?

MyVirtualCPA :

I'm sorry that I am asking all these questions, but I need to know this information to give you an accurate response

MyVirtualCPA :

Based on what you have already told me, your additional tax is not going to be very much, but I need to know your filing status so that I can know for sure

MyVirtualCPA :

Please let me know your filing status...

Customer: I am single 68 yr old woman
Customer: Single
MyVirtualCPA :

Okay, you are in the 15% tax bracket, so your tax will go up by $705

MyVirtualCPA :

as a result of this loan

Customer: The 15% bracket encompasses what amount of yearly income What is the top amount that you can make and still be in this bracket
MyVirtualCPA :

$36,250

Customer: Thanks
MyVirtualCPA :

You're welcome

MyVirtualCPA :

If you are satisifed with your answer, please rate as "excellent" so that I may receive credit for assisting you today

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 10359
Experience: Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Megan C and other Tax Specialists are ready to help you
Expert:  Megan C replied 9 months ago.
Hello, Linda

Thanks for the opportunity to assist. If you would, please take a moment to rate my response "excellent" so that I may receive credit for assisting you today. It was a pleasure working with you

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