You'll hear this from many people while you're young: "buying a house is a great financial decision, you can write off all that interest you pay." That may have been the case one day, but not today. It's a huge misconception that many people fall victim to. The standard deduction for 2007 is $10,700 for a married couple, filing jointly. Meaning, unless your mortgage interest, taxes, charitable contributions, etc. exceeded $10,700 last year (filing jointly), buying a house for the mortgage interest write-off won't help you! So keep that in mind before getting caught up in the hype of buying a home for all that tax money you'll save. Most people just do not benefit from this. Sometimes (and in this real estate) market, it may not hurt to rent for while longer.
Buying a house for a tax deduction - dumb advice
Posted by Data Babble | 9:10 AM | mortgage interest, taxes | 1 comments »
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Also, note that even if you reach the threshold where it benefits you to itemize and claim the mortgage interest deduction, it's a tax deduction rather than a credit. If, say, you are in the 33% tax bracket the deduction will be equivalent to getting a third of the interest you paid back. The tax break is handy, but you are still better off not paying interest.