Income Tax Mortgage Interest Deduction
April 23rd, 2010
Question: If I pay $10K in fed income tax and I pay $10K in mortgage intrest and prop tax, is all 10K deductable?
Is mortagae interest and property taxes a 1 for 1 ratio when dealing w/ U.S.A. federal income Tax Deductions? I’m looking at building a house and I will be paying about $11,000 in interest my first year and I expect property taxes to be about $4,000 per yr. My wife and I currently pay about $14,000 total in for Fed. Income taxes (we currently rent a home). Will I be able to get ALL of that $14,000 back as workable income after I deduct my interest and real estate taxes??…or is there a limit as to how much I can deduct?? Thanks.
Answer: You do not receive dollar for dollar back from the government from paying your mortgage interest. You get to adjust your gross income by subtracting the interest paid from your gross wages/tips/other income.
If you worked 1 job and had no other income and you made $50,000 then you can subtract the $11,000 from that making your Adjusted Gross Income (AGI) $39,000.
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