Everyone connected to the real estate industry touts how owning your own home is tax smart.  How you want the tax deductions you get from home ownership. This is one of those things that is technically correct, but is worth little or nothing to most of us in practice.

The mortgage interest tax deduction isn’t all it’s cracked up to be

That’s because of the standard deduction. When you do your income tax, the IRS gives you a deduction that you subtract from your income of $12,600 for a married couple and $6,300 for a single person. That means you have to have eligible expenses like mortgage interest greater than that before you see the first dollar of benefit from the mortgage interest deduction.

On a typical mortgage, a married couple would not see the first dollar of tax savings until you had a $300,000 loan at today’s rates. Plus the amount of tax you save is based on your tax bracket. If you pay federal tax at 25%, each dollar past the standard deduction will save you 25 cents in tax. The truth is almost the entire benefit of the mortgage interest deduction goes to those who make more than $250,000 per year and have a mortgage of more than $500,000.

The reason to own a home is not for tax savings. You should own a home to have a place of your own that you can raise your family in. That is a good enough reason for two-thirds of us! Learn More =>