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So with the buy down the purchaser can get a 30 year set rate at five.75%twenty five. The principal and curiosity payment would then be $1,750.seventy two/month for principal and curiosity. This would leave an initial cash movement after financial debt service with out advantage of curiosity and depreciation of $2,137-$1,750.72/month =$386.28/month cash movement. The interest deduction would be $17,250/year. The depreciation with $75,000 on the land the improvement at say $300,000/27.5 = $10,909.09/year. Thus our after tax cash flow would be Net Working Income: $25,644/year -$17,250 interest deduction - $10,909= ($2,515) tax reduction. If the proprietor is in the thirty%twenty five tax bracket this would save $754 in federal earnings tax.

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