Tax Break on Mortgage Interest?

From Blunt Money.com

Homeowner’s interest & student loans

A reason often given for not paying off your mortgage or student loans is that you get a tax break by having them. However, just having a mortgage or a student loan and paying thousands of dollars in interest on them doesn’t guarantee you a tax break. Whether or not you get a deduction for them depends on several factors.

For example, here are some figures based on our tax return:

Mortgage interest paid: $6291
Amount deductible: $0, because we were better off taking the standard deduction.

Student loan interest paid: $421
Amount deductible: $249

In other words, we paid $6712 in interest for a total savings of $249. Not my idea of a bargain. Of course, if we’d had a huge mortgage and paid enough in interest that combined with other deductible items it put us over the amount for the standard deduction, it might have been a different story. I still don’t like the idea of paying lots of money to pay slightly less elsewhere, but it would pay to run the numbers for your particular situation. It’s just a myth that buying a house or carrying a student loan will always save you money on your taxes.


I made a comment on her blog that I was never able to itemize when I had my mortgage. I would always hear people say (and read) that the biggest benefit to owning a home was the tax benefits. I always had a twinge of fear that somehow I doing something wrong, either with the mortgage or the taxes. It didn't make sense, EVERYONE says it, but I NEVER had enough to itemize. It was very frustrating. That was one of the reasons I decided to just pay off the debt as soon as I was able.

I started off paying $50 extra a month, but then I got a copy of the ammortizatin schedule got on track and would then make the regular payment plus the next 2 or 3 principal payments. Doing this meant that I was really making 4 years worth of payments in 1 calendar year.

I refinanced after my divorce to get the ex's name off the mortgage. One, I didn't want him to benefit from my excellent payment habits and two, I got a bit extra money to remodel my bathroom and get a lower interest rate and shorter term.

The other big reason I wanted the house paid in full is that I have an irrational (or maybe not so irrational?) fear of being homeless. I know that if I were to lose my job, I would get another one, no matter doing what. With the house and my car paid for, knowing that I can live on minimum wage (plus my savings) if necessary makes me feel much better.

$0.94 Beaners