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The only time the mortgage interest deduction crossed my mind was when I purchased my first home. I was single and renting and needed a deduction off my taxes, so I purchased a townhome. After that, the mortgage interest deduction didn't play a part in my home buying decisions at all. I have owned several homes over the last twenty years. My concerns were, price, mortgage interest rate, locations, schools and condition of home. Everything else was minor.
Interesting responses, today with low interest rates deductions are not that important anymore. I remember paying 13% and even 16.5% interest for my current house, and interest deduction was very important.
When I bought my first home, the mortgage interest deduction was what totally tempted me financially. I was darned if I was gonna let that good of a deal get away. And true, interest rates were 10-14 % so it was a big deal.
When you figure in the Standard Deduction you normally get, it probably amounts to 10% or less of the mortgage payment. I doubt it's the biggest consideration.
it may mean little if you can't clear the standard deduction by enough . most homeowners cannot itemize unless they are higher income earners according to irs records .
if you are to much of a high income earner than you lose your deduction for real estate taxes if the amt kicks in .
as time goes on and you pay less and less interest eventually cutting out all interest deductions more and more of the payment is on you .
tax wise it is the renter who benefits the most . they get to fly the empty seats . they may have very little money spent on itemized deductions . a couple can pay in 5 or 6k out of their piggy bank and write off over 12k . they actually get money back they never spent .
on the other hand there is a pretty good chance the homeowner actually pulled that dough out of their piggy bank and are not getting back anything they did not spend .
Quick, write that out on a napkin:
You have just invented the Mathjak curve!
(the mortgage interest deduction starts at zero, and as income increases, MID increases, until income is high enough it goes away)
the mortgage interest stays under the amt rules if you trigger it . it is your real estate taxe deductions that go away .you're allowed to deduct interest on loans totaling up to $1 million unless you're married and file separately, in which case the corresponding amount is $500,000.
When you figure in the Standard Deduction you normally get, it probably amounts to 10% or less of the mortgage payment. I doubt it's the biggest consideration.
yep , unless you are in a high cost of living area clearing the standard deduction for a couple can be tough .
most folks are surprised when they see how little impact there is figuring in their house vs pulling it out of the calculation .
it i the renters that get the windfall here as they generally have little itemized deductions over the standard one . they get money back they never spent in the first place . they can just put that towards the rent
We paid cash so did not have a thought about it at all.
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