Best Tax Bill Ever ($80,817)

Who gets excited to get their tax bill? The answer:  this girl.  

Last year we paid about $3,600 in property taxes on our house.  We purchased right around this time last year, and therefore missed the cutoff for getting the live-in exemption, so we had a whole year of paying full price on our taxes.  We just received this year’s tax bill, with the exemption in effect, and it will be about $1,200 less for the year.  This means when our mortgage serviced reevaluates how much is going into our escrow account, our mortgage payment will be going down $100 a month.  I’m pretty excited about that.

Now the question is:  do I continue paying that extra $100, toward the principal of the mortgage, or do I add it to my student loan payments?  The mortgage has a higher interest rate at 5.25% (crazy, right?) than any of my student loans, now that they’ve been refinanced (currently 5% and 4.74%).  Our mortgage interest rate is so high because of our lower down payment and the fact that it’s a two family.  Part of me wants to aggressively pay down the mortgage, in order to refinance to a lower rate, but I’d need to get to 25% equity to do that (because of the multi-family), and who knows where interest rates will be by the time I accomplish that.  I do feel confident that it’s not gone down in value since we bought it, and with some additional labor I think we can increase the value more.  There were definitely issues with the house that the previous owner just didn’t want to deal with.  With good bonuses and paying extra on the mortgage instead of the loans, I think I could get to 25% two years from now, but I don’t think I want to sacrifice student loan payoff.  I might think more about this in the upcoming months, but for now I’ll just be excited that our minimum payment will be going down soon!

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2 thoughts on “Best Tax Bill Ever ($80,817)

  1. I know this is an older post but just thought I’d chime in. I’m not sure where you are but here in Canada, things can be written off if you have tenants (given that you claim the rental income of course), which include mortgage interest. For that reason alone, I would pay off other debts before focusing on the mortgage, but I’m not sure if that applies to you.

    • I just saw this today! In the US, I can write off the portion of mortgage interest that applies to the tenant’s portion of the house, and can similarly write off some other house-related expenses. Generally in the US, personal home mortgage interest is deductible, but my personal part of the mortgage is so low (and I can still write off the tenant part) that taking the standard deduction is better for me. Lastly, up to a certain income limit (which I may eventually hit), you can write off up to $2,500 in student loan interest, so either way I get to write off part of it.

      Either way, I’d been paying $1,400 a month in mortgage ($1,359 and change, plus $40 in additional principal to make it an even amount), and my payment will now be $1260 — so I’ll continue paying the extra $40, and potentially add the extra $100 to my monthly loan payment.

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