Does being subject to AMT impact the buy-rent decision?

Yes because it phases out the deduction for property tax and New York State & City income tax (which have a property tax component in them). Then when you reach the upper income levels it restores those benefits. Others can give you the specific brackets.

That's a start; thank you, Steve.

I guess a key question with which I wrestle is does AMT affect the benefit of the tax deductibility of mortgage interest.

Would appreciate it if anyone could address that question for me.

Thanks!

"does AMT affect the benefit of the tax deductibility of mortgage interest."

No. Only taxes - income and capital gains. Mortgage interest is capped at the $1 million mortgage level.

Thanks, Steve. That was actually the key question I was trying to understand.

It could all change, however.

That is a good point, sevejhx. The AMT, originally designed to apply to the fat cats, is applying to an increaingly large fraction of taxpayers, and consequently there is decent chance that those on the lower end will be granted some relief.

I don't care if Obama raises taxes on people who make over $250k if he fixes AMT and lowers taxes on all the rest. Although tech_guy aka LICComment (who is now ignored) believes that everyone pays their top marginal rate of tax, depending on how the plan is implemented it may not lead to a tax increase at $250k at all, but because of the cuts at the lower levels the threshold would be higher.

I'd rather even pay a little more for the certainty of knowing in advance how much tax I have to pay, rather than waiting till all the decisions are made to wind up with a surprise.

Up to $1.1 million ($1 million in acquisition, $100K HELOC)....

The 250k limit takes into account the cuts at the lower levels. So those people will have a higher marginal rate, offset exactly by the lower taxes at their lower brackets. Which, for people at the 250k/year level, means a slightly higher mortgage tax deduction!

Keep in mind that that $250 K refers to married couples. The figure is a chunk lower for singles.

Topper, that is correct for now but Joe Biden indicated in a speech that the amount could be less, as low as $150K of family income. Also, there are a significantly large number of married working couples in this city so hitting $250K isn't a "tax the rich guy" approach in this city.

To answer your quesion, not really. The mortgage interest deduction (for mortgages >$1MM) is ok under AMT, but you can't deduct property taxes.

That said, if you rent, property taxes your landlord pays could be passed on to you as a rent.

Thanks, Manhattanfox, that's an interesting wrinkle.