1. Limited time only! Sign up for a free 30min personal tutor trial with Chegg Tutors
    Dismiss Notice
Dismiss Notice
Join Physics Forums Today!
The friendliest, high quality science and math community on the planet! Everyone who loves science is here!

Word problem - Buying houses and taxes?

Tags:
  1. Aug 21, 2010 #1
    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. jcsd
  3. Aug 21, 2010 #2

    HallsofIvy

    User Avatar
    Staff Emeritus
    Science Advisor

    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.
     
  4. Aug 21, 2010 #3
    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
     
  5. Aug 22, 2010 #4

    HallsofIvy

    User Avatar
    Staff Emeritus
    Science Advisor

    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.
     
  6. Aug 22, 2010 #5
    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.
     
Know someone interested in this topic? Share this thread via Reddit, Google+, Twitter, or Facebook




Similar Discussions: Word problem - Buying houses and taxes?
  1. A word problem (Replies: 3)

  2. Word problem. (Replies: 11)

  3. Word problem (Replies: 6)

  4. Word problem (Replies: 3)

Loading...