Q: I’m a Realtor and I have some clients who just came back from their tax consultant.

Their tax guy told them that it wouldn’t be beneficial for them to buy a home because of the current tax bracket that they are in.

My clients are in a low tax bracket and they can only afford a $3,000 down payment for a $400,000 home.

Can this be true? My understanding is that anyone can benefit from purchasing a home no matter what the market is and what tax bracket they are in. I thought the tax advantages of buying a home were also available to people who are in a low tax bracket.

A: There are some serious misconceptions in your letter that concern me.

First, most people do not benefit from the mortgage interest deduction. To benefit, you have to itemize on your federal income tax statement. More than 60 percent of Americans take the standard deduction because they don’t have enough deductions to itemize. You’d only itemize if you have more deductions that the standard deduction, and most low -income and many middle-income families don’t fall into that category.

On the other side, if you make too much money, the deductibility begins to phase out and the Alternative Minimum Tax (AMT) will affect a person’s taxes. So even if you do itemize, if you make more than around $300,000 per year, you lose some of your ability to deduct the mortgage interest you pay as a result of the phase out and the AMT.

But let’s get to the really scary part of your email: I’m not sure how you go about computing numbers and qualifying your home buyers, but I’m amazed that you think a “low tax bracket” buyer can afford a $400,000 house with only $3,000 for a down payment.

On a 30-year fixed rate mortgage, the monthly payment on a $397,000 loan at 6.5 percent is $2,509. To qualify, your clients would need an income of at least $125,000 to $150,000. That may not really leave an individual or a couple in a low tax bracket.

If they are in a low tax bracket and are of moderate means, how do you suggest they pay for this purchase? Are you suggesting that they take a pay-option adjustable rate mortgage? That’s a negative equity loan. If they borrow $400,000 now, they’ll owe $440,000 in five years on that loan. Again, a low-income couple has no hope in ever paying that that back. It’s a fast track to bankruptcy.

I don’t know what kind of mortgage brokers your firm works with, but I’d ask a top mortgage company to run some numbers for you so that your clients can see how much they would be paying out each month. They should only look at homes that are truly affordable for them.

You should also try to help them figure out exactly how much they can afford with a 30-year fixed rate mortgage — and then see what kinds of homes fall into their price range.

Finally, there are some scenarios in which wealthy people have a lot of their investments in tax-free municipal bonds. While this may be the case with this couple, giving them the income they need to pay a mortgage, it seems unlikely from the rest of your letter. And if this were the case, they should have more cash for the down payment.

Sept. 28, 2006.