I am not a business major and this class is killing me in terms of grading. I know there are smart people in this great BBS. If anyone can help me out I would really be grateful. Please help a fellow rocket fan. 1. Jackie is in the 28% tax bracket and has no itemized deductions; her standard deduction is $5,350. She is considering the purchase of a home; if she does so, the first year she will have the following housing-related costs: Mortgage interest $14,000 Principal repayment 800 Homeowner's insurance 1,000 Real estate taxes 4,000 Homeowner's association dues 1,200 How much additional income tax savings would result from her home ownership? 2. Sheldon has a home valued at $108,000 with an outstanding mortgage of $70,000. If his lender is willing to provide a home equity loan of up to 80% of market value, how much could Sheldon borrow using a home equity loan? 3. Alice is 40 years old and earns $35,000 annually. The multiple of earnings approach to determine the amount of life insurance needed shows that she should have 6.5 times her annual earnings. Assume that she follows the recommendation and buys a participating whole life policy. Over the next ten years she pays $25,000 in premiums, receives $3,000 in policy dividends and borrows $8,000 against the policy's cash surrender value. If she then dies, how much will her beneficiary receive?
If you itemize you can deduct the mortgage interest and the real estate taxes, for a total of 18 large. Thus instead of getting a standard deduction of $5,350, you would get the $18,000 for a $12,650 difference. The amount save would be $12,650 * 28% You do the math. In effect, your AGI would be reduced by $12,650. This is money you will not have to pay 28% tax on.
