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Showing posts from October, 2011

Your Mortgage Interest Deduction Isn't as Great a Tax Savings as "They" Claim

I will pay $4,320 in mortgage interest this year.  And it will only save me $60 in Taxes. The tax savings touted for mortgage interest is a terrible myth -- one of those that also convinces us it's okay to buy bigger houses and helped get us into this housing mess. Yet financial gurus like Ric Edelman in his latest book  "The Truth About Money," try to mitigate the pain of paying mortgage interest each year by saying "oh, you really aren't paying all that much interest -- because you are saving 25% of it in taxes, if you are in the 25% bracket and itemizing on schedule A."   In real life, this is ot necessarily true and certainly not true for a lot of single people !  You must do at least a simple analysis (see example below) before you really know.   I used Quicken and the IRS tables for back-up and checking.  You can do the same in about an hour and if you don't have Quicken, the IRS 2011 tax tables will do. Even if you file as a single per