Mortgage Interest Deduction: Not A Tax Break For The Middle Class

[Hoyt]

16. I think most middle income folks overvalue the taxes saved through the mortgage deduction.

Let's say you have a 250,000 mortgage and you are in the early years of a mortgage with a 4% rate. Thus, you are paying something like $10,000 in interest (first few years). Now depending upon your taxable income, that $10,000 "saves" you what -- $1000 to $3,000 in income taxes. The $3000 would be for folks with pretty decent incomes.

I'm not minimizing it at bit, but I think what those that want to eliminate the mortgage deduction are talking about is raising the standard deduction somewhat to compensate to some degree.

In any event, they aren't likely to throw out mortgage deductions for most of us -- it's too ingrained in the way we think about investing in houses. They might cap it, but they won't eliminate it unless they "give us a nice gift" (while screwing us in other ways).

I'm glad to have my mortgage deduction, but it is truthfully just another loophole that a lot of us take advantage of. "Loophole" has a bad connotation when someone else gets the benefit. When we get the benefit, we think it's OK.