jk70
Junior Member
Joined: Jan 3, 2011 16:39:57 GMT -5
Posts: 154
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Post by jk70 on Jan 3, 2011 18:15:01 GMT -5
Admittingly, I know little about how taxes work. I have an accountant who does it all for me. My question is this and goes with what a lot of people have been talking about.
Let's say you pay $20,000 in mortgage interest and your in the 30% tax bracket. How much can you deduct from your taxes?
- the whole 20k or 6k (30% of 20K)?
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❤ mollymouser ❤
Senior Associate
Sarcasm is my Superpower
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Joined: Dec 18, 2010 16:09:58 GMT -5
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Post by ❤ mollymouser ❤ on Jan 3, 2011 18:37:47 GMT -5
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❤ mollymouser ❤
Senior Associate
Sarcasm is my Superpower
Crazy Cat Lady
Joined: Dec 18, 2010 16:09:58 GMT -5
Posts: 12,861
Today's Mood: Gen X ... so I'm sarcastic and annoyed
Location: Central California
Favorite Drink: Diet Mountain Dew
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Post by ❤ mollymouser ❤ on Jan 3, 2011 18:40:26 GMT -5
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taxref
Junior Member
Joined: Dec 31, 2010 11:09:13 GMT -5
Posts: 220
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Post by taxref on Jan 3, 2011 20:57:10 GMT -5
The basic answer is that home mortgage interest is a deduction (a reduction of taxable income) rather than a credit (a dollar-for-dollar reduction of tax). Using the numbers in your message, you would deduct $20K from your taxable income, which would result in a tax savings of $6K.
I would add its more complicated than that, as several other factors could come into play. That answer, however, illustrates the basic concept.
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TheOtherMe
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Joined: Dec 24, 2010 14:40:52 GMT -5
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Post by TheOtherMe on Jan 3, 2011 21:37:43 GMT -5
You take the home mortgage interest deduction on Schedule A. The property taxes you pay on the home are also deductible on Schedule A, along with things like state income tax and charitable contributions.
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