Have a Tax Question? Ask a Tax Expert
Please do not be offended; but that is like asking if it is wise to spend 100 dollars in order to save 15 or 30 dollars. That is, it is never wise to let the potential savings decide if an investment or purchase is wise; rather the savings (whether a tax deduction or a sales discount) should only be used as an additional factor in the decision to buy. Please do not let the tail wag the dog.
How much of a tax benefit there may be from having a second home or condo can be determined by looking at your prior return or at a projection of your current return. Please uderstnad that you will be allowed the standard deduciton for you filing status and using itemized deductions is only beneficial to the degree that the total of all your deduciotns allowed for itemizing exceeds the standard deduction.
For 2007 using married filing joint is allowed a standard deductoin of $10,700. If you have 5,000 of taxes, charity and other than mortgage interest deductions you will use the standard of 10,700. Should you get a second home and have 10,000 of mortgage interest you would have a total of 15,000 for deductions. But you will not save 15,000 times your marginal rate of 15%. Rather the savings is only (15,000 - 10,700) time .15 = $ 645.
Please base your decision on buying a second home on the benefits of personal use and the expectation of increase in value and not on the less important aspect of getting a tax deduction. Or, compare buying that home with other possible investments of the money you would pay in interest, taxes and maintenance of the home.
I hope this helps. Congratulations on paying off the mortgage. Best wishes for wise use of the additional cash per month you no longer are paying into the mortgage.