# Word problem - Buying houses and taxes?

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1. Aug 21, 2010

### amanda_

1. The problem statement, all variables and given/known data

Miguel Tijera plans to rent one house and purchase another. He estimates that mortgage interest deductions on his federal income tax will be 25% of his mortgage payments. He wants to spend no more than $800 a month on rent and$2000 a month on rent and mortgage payments combined. This amount does not take into account his income tax savings.

What is the maximum monthly amount (rent and mortgage combined) that Miguel would have to pay after subtracting his tax savings?

3. The attempt at a solution

= 2000(25%)
=1500

that's not one of the options, so I have no idea how to solve this.

2. Aug 21, 2010

The total rent and mortgage payments are $2000 but the rent could be up to$800 leaving no more than 2000- 800= $1200 for mortgage payments. The deduction is 25% of 1200, not of the whole 2000. 3. Aug 21, 2010 ### amanda_ Okay so, I get 300 - but that's not the correct answer either. So here's what I did 25%(1200) = 300 2000-300 = 1700 4. Aug 22, 2010 ### HallsofIvy You seem to be just putting numbers together at random without thinking about what the problem asks. Yes, if he paid the maximum, 800 for rent, so that he was paying the minimum,$1200, for mortgage payments, he could deduct 25%(1200)= $300. But the problem did not ask for that, it asked for "the maximum monthly amount (rent and mortgage combined) that Miguel would have to pay after subtracting his tax savings". That would be 2000- 300=$1700.

5. Aug 22, 2010

### amanda_

I don't understand what the question was asking - hence asking here.

You just gave the same equation I did, so I obviously wasn't putting numbers together.

Thanks.