I just got a form for my Taxes on the interests I paid for 2006 and need some help.?

Question

I paid 12,000 dollars will I get all of it back? this is my first home so I don't know.... Thanks

Answer 1

It is a little early in the year to get the form from your mortgage company. The tax advantage will depend on your income tax bracket and the amount of other deductions you have.

For example lets say that you have deductions $2000 below the standard deduction and the highest income tax rate you pay is 25%. Then the first 2000 is not giving you a tax advantage, because at that point you are breaking even with the standard deduction. So you would have 10000 remaining. This reduces your income by 10000 which reduces your taxes by 2500(10000 * 0.25).

You could use an income tax program to determine your taxes twice(once using the standard deduction and once itemizing your deductions) and the difference is the tax advantage from your mortgage. I am assuming would use the standard deduction without mortgage interest.

Answer 2

You would never get the whole $12,000 back from taxes. The most you can get back is your tax rate times the $12,000. If you are in a 30% tax bracket your tax is reduced by $3,600 and if you overpaid your withholding and/or estimated tax payments by that amount that would be your refund

Answer 3

Depends on tax bracket. Not getting it all back - no. Likely in 28% marginal bracket or so $3360. Tax advantage of houses way overblown.