your mortgage payment is $1,500 per month. Of this amount, insurance is %50, property taxes are $200, and interest averages about $1,100. Assuming you have other itemized deductions that already exceed your standard deduction and that you are in the 31% marginal tax bracket, what is the reduction in your annual income tax liability ad a result of owning a home with this mortgage?

To calculate the reduction in your annual income tax liability as a result of owning a home with this mortgage, we need to determine the deductible amount of interest and taxes.

First, let's calculate the annual deductible amount for each component:

1. Insurance: Since the insurance is 50% of the total mortgage payment, it would be 0.50 * $1,500 = $750 per month or $9,000 per year. Insurance payments are generally not tax-deductible, so we won't include this in our calculations.

2. Property taxes: The property tax amount is given as $200 per month, which would be $200 * 12 = $2,400 per year. Property taxes are generally tax-deductible.

3. Interest: The annual interest paid on the mortgage is given as an average of $1,100 per month, which would be $1,100 * 12 = $13,200 per year. Mortgage interest payments are generally tax-deductible.

Next, we need to apply the 31% marginal tax bracket to determine the tax benefit of the deductible interest and property taxes. Given that your itemized deductions already exceed the standard deduction, we can directly calculate the tax reduction:

Tax reduction = (Deductible interest + Deductible property taxes) * Marginal tax rate
= ($13,200 + $2,400) * 0.31
= $15,600 * 0.31
= $4,836

Therefore, the reduction in your annual income tax liability as a result of owning a home with this mortgage would be approximately $4,836.