Doubtful Deduction

2 Replies

The median priced home is $220,000. Assuming 10% down and thus a $198,000 mortgage, at the current 30-year mortgage rate of 3.7%, that works out to a payment of $917/month. Add $180/month for property taxes and the total is $1,097/month - an annual total just $564 higher than the 2015 standard marital deduction of $12,600! Meaning the mortgage interest deduction is virtually worthless to a family buying a median priced home.

@Joseph Pugliese

Yeah, whether you should take the standard deduction or itemized deductions is going to be different for everything situation. When itemizing (presumably because there are more deductions to take), the mortgage interest can be a good deduction to add in. I see what you're saying though. As the only deduction to take, mortgage interest may not be all that helpful.

Ours has been well below the standard deduction since refinancing in 2012. Our annual interest paid dropped from over $16k to less than $8k. (went from a 6.5% 30yr to a 15 at 3.38) At first I was like, what? Never been here before!

The good news if you're not close is you don't have to track down every car tab and charitable donation to itemize  at tax time anymore. The better news is the rate is low enough that the principle pay-down is huge! Less interest paid to banks is always a good thing in my book. Ours will be $193,000 less with the refi.

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