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So with the buy down the purchaser can get a 30 yr set price at five.75%25. The principal and interest payment would then be $1,750.seventy two/month for principal and interest. This would leave an preliminary cash movement after financial debt service with out advantage of interest and depreciation of $2,137-$1,750.72/month =$386.28/month money flow. The curiosity deduction would be $17,250/year. The depreciation with $75,000 on the land the enhancement at say $300,000/27.five = $10,909.09/year. Thus our after tax cash flow would be Internet Working Earnings: $25,644/year -$17,250 curiosity deduction - $10,909= ($2,515) tax reduction. If the proprietor is in the 30%25 tax bracket this would conserve $754 in federal earnings tax.

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