Hello again Customer,
Yes you are correct that in the early years of a mortgage, most of the payment goes towards the interest, but it really depends on the entire amount you are financing and the length of time that the loan is being amortized (15 years, 20 years, 30 years, etc.) so it would make a big difference in what the interest amount might actually be.
However, from what you have told up to this point, it sounds like basically you now have taxable income of around $59,000 per year. You would be allowed one personal exemption for yourself of $3,500, bringing that down to $55,500. In order to take advantage of deducting interest paid on a home mortgage, you would need to itemize your deductions on Schedule A rather than claiming the standard deduction. The standard deduction allowed is $5,450, so you have to figure that you would be allowed that deduction regardless of whether or not you purchase a home. That being said, you would really have to figure out just how much your itemized deductions exceed what your standard deduction would be, to see how much additional you are able to deduct as a result of this mortgage interest. You would of course also be allowed to deduct your property taxes paid on the home.
Basically right now your top tax bracket is 25%. So as an example - if you buy a home and start itemizing your deductions and lets say they come to $10,450. Your standard deduction would be $5,450 so you have a net increase of $5,000 more in deductions. Your tax savings in your bracket would be 25% of that amount, or $1,250 for the year.
You really need to find out just how much of that mortgage payment is interest and also take into account your property taxes and other deductions which you can itemize.
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