Q:

How do you calculate taxes on a mortgage with a calculator?

A:

Quick Answer

Calculate monthly escrow payments for property taxes by dividing the total annual property tax liability by 12. You may pay property taxes into an escrow account monthly and then pay in full to municipal tax authorities when due, according to the Home Loan Learning Center.

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How do you calculate taxes on a mortgage with a calculator?
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Full Answer

Home buyers usually find out property tax amounts when sellers disclose them, but you can also obtain the taxation information from the local property tax assessor's office, says the Home Loan Learning Center. Property tax rates vary by home location.

Bankrate provides a tool on its website to calculate the tax savings associated with mortgage interest and property taxes. Mortgage interest and property taxes are deductible from income on federal tax returns, and you can calculate these deductions as a tax saving based on your marginal tax rate. In its document Tax Topic 503, titled Deductible Taxes, the IRS website explains that you can deduct paid property taxes from income, reducing your reported taxable income. IRS publication 936 discusses mortgage interest deductions.

The tax savings realized through mortgage interest and property tax deductions depends upon the marginal tax rate of the person or people filing the income tax return, as illustrated by the Bankrate calculator. The tax saving is the difference between the amount of tax that would have been paid without property tax and mortgage interest deductions and that amount of tax paid with the deductions included.

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