Help with tax question with FHA Loan of 900k at 4.85%

[Rene Garcia]

My wife and I make a combined income of nearly 300k in our W-2 job. We don't own any property and are getting killed in taxes. Last year we paid about 60k in taxes alone. Our accountant said that buying a 4-Plex apartment at 855k at 4.85% FHA loan would actually give us back 30 to 40k. Therefore only having to pay 20 to 30k in overall taxes. Does this sound correct? Already qualified for 1.1MM FHA loan and looking around southern California. Just hoping someone can confirm this tremendous benefit

[Russell Brazil]

A 20% effective tax rate is getting killed in taxes? Id kill for a tax rate that low.

3/4 unit properties are going to be subject to the FHA self sufficiency test. High cost 3/4 unit properties typically have a hard time passing that test, at least in my market of DC.

State income tax and property tax deductions are limited to $10k, which can affect your reduction in tax liability in high tax areas. 

A $1 million property will have something like a $35-$35k mortgage interest deduction. So multiple the deduction amount by the marginal tax rate to figure out that value.

So mortgage interest and state income taxes alone and you increase your deduction against the standard deduction.