The ability to take a mortgage tax deduction is one reason real estate remains a strong investment. Instead of sending money to a landlord each and every month, you can build equity and get a reduction on your taxes at the same time. However, each and every year some people are surprised to learn they don’t benefit from a deduction on mortgage taxes.
Depending upon your total mortgage cost, many people benefit from taking a standard deduction rather than the mortgage tax deduction. Especially if you make a large down payment or purchase a fairly affordable home, the mortgage interest may not amount to enough to warrant the mortgage tax deduction.
Find out in advance, before making a final offer, if a mortgage tax deduction will benefit you by using a convenient monthly mortgage calculator and an estimated tax calculator. If it is borderline, then you may find the additional tax benefit offsets the increased monthly payment required to purchase a slightly more expensive home. Speak to a knowledgeable real estate broker or your personal tax adviser to determine the best option for your situation.