The White Coat Investor's Guide for Students: How Medical and Dental Students Can Secure Their Financial Future (The White Coat Investor Series) by James Dahle

Author:James Dahle [Dahle, James]
Language: eng
Format: epub
Publisher: WCI Intellectual Property, LLC
Published: 2021-01-06T23:00:00+00:00

# 9 – Residents Do Not Get a Tax Break for Owning a Home

Lots of realtors and mortgage agents like to sell homeownership as “The American Dream.” Their second favorite sales angle is to convince you that you will lower your taxes by becoming a homeowner. However, the likelihood of that happening in any significant way as a resident is quite low. In 2021, a couple filing Married Filing Jointly (MFJ) has a standard deduction of $25,100. That means until you have at least $25,100 in itemized deductions including charitable gifts, mortgage interest, and taxes (including up to $10,000 in state income taxes and property taxes), none of it is really deductible. Even if you manage to come up with a few thousand more than $25,100, really only the amount above and beyond that is an additional deduction you received for buying the house.

This is not going to create a tax break for most residents. They just do not spend more than that on anything that becomes an itemized deduction. If you are single, the bar is lower, but it is still $12,400 before anything is really deductible. Part of the reason you may wish to own a home as an attending is the tax benefits, but most residents are not going to see any of those. Residents just cannot afford a big enough house that mortgage interest and property taxes are more than the standard deduction. At 3% interest, $20,000 in mortgage interest would suggest a mortgage of almost $700,000—utter foolishness on a resident income!

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