Mortgage Tips

Minus your tax savings.

Owning a home allows you to deduct part of the expenses on your tax form.

What you might be able to deduct. Both the IRS and most states allow you to deduct limited amounts of your mortgage interest and property taxes as itemized deductions on Schedule A.

The limitations. You can deduct the interest on the first $1,000,000 of debt as well as all of your property taxes. On a second mortgage (home equity loan) you can deduct to a maximum of $100,000 borrowed.

A simple estimate. Multiply your monthly mortgage payment and monthly property taxes by your federal income tax rate -- which will vary, depending on your tax bracket, anywhere from 15% to 40%.

For example. If your monthly mortgage payment on your $200,000 home is $1146 for a $160,000 loan, and your monthly property taxes are $250, and your income is roughly between $40,000 and $100,000 per year, you would have a federal tax rate of about 30% if you are married, filing jointly, 30% of $1146 + $250 would give you a tax savings of about $400.

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