How much of a tax deduction do you get for your home mortgage? Well, you may not be getting what you think you are. In order to get the deduction, you first have to overcome the standard deduction. For a married couple in 2015 that is $12,600. Until your itemized deductions are worth more than that they are essentially useless and don’t lower your tax bill.
In order for your deductions to count toward that minimum, your local and state tax employment taxes, real estate tax, mortgage interest, charitable giving and other deductions need to exceed $12,600. With today’s low interest mortgages, many middle class taxpayers end up taking the standard deduction because it’s more than all the other items combined. That means they get no benefit from having a tax deduction for their mortgage. Many higher income wage earners are subject to the Alternative Minimum Tax along with phase outs that also limit their deductions! Even those of you who do get the deduction only get the amount above $12,600 since that is already given to you. That means all your other deductions need to be over $12,600 a year or you don’t get full credit for your mortgage write off.
At the end of the day your mortgage may not be as helpful as you think for lowering your tax bill and you might just be better off having the payment you send in every month to do something you love. Stay tuned for more tax tips to help you legally reduce your tax bill.