Estimated Tax Savings

Estimated tax savings is a value determining the amount of tax a potential buyer would save if they chose to rent. The cost of renting for one year can be determined by adding monthly rent and renter’s insurance and multiplying that number times 12. Any expected rental increases would need to be figured in for multiple years. As a renter, all taxes are included in the rent, and utilities would be considered the same as owning. The cost of owning a home has many more variables. The monthly mortgage, the interest rate, homeowners insurance and home maintenance all need to be added together and multiplied by 12 to get a yearly cost number. The property tax number should remain separate. An example would be if it cost $12,000 annually to rent and $10,000 to own, but property taxes were $2,500. The tax savings would be $500.