how much of your mortgage interest and points do you get back after you do your taxes?

Question

I've heard varying reports on this. It's our first year in owning a house. Some say you get nearly all of it back, others say it depends on how many dependents you have and how much money you make.

Answer 1

All of the above, in a sense.

Mortgage interest lowers your taxable income. Depending on your current tax bracket (the amount of money you make) and your deductions, will determine your refund, if any.

Since this is your first year owning, go to a tax professional. Jackson Hewitt worked extremely well for me...they found deductions I didn't even know existed for federal and state. After they did the first year, I did them myself using their format.

Answer 2

Your mortgage interest, points paid at closing, and property taxes are all tax-deductible.

However, you only really see whatever benefit is over and above the standard deduction, which is increased based on how many people in your household.

But, and especially if you live in a state with an income tax, it's not hard to exceed the standard deduction with most mortgages now.

And you don't "get it back" per se, you reduce your taxable income by whatever amount it ends up being, and you save a percentage of that amount in taxes.

Consult a tax professional for specifics to your own situation.

Answer 3

It depends on your tax rate (of which there are many factors). Interest and Points (really the same thing) reduce your income. So, you will save the tax money that you would have paid on that income. So, if you are in the 15% tax bracket you will get 15% back; The 20% bracket will get you 20% back. If you drop a bracket then you will get the top bracket percentage back for that portion.

IIRC, the highest tax bracket is 35% for those with incomes over $100k, roughly. So the most you would get back would be 35%.

Answer 4

There is a standard deduction of $10,300 if you are married. Total up all of your deductions which would include the interest on the mortgage and if greater then you itemize on your tax return. The deductions are subtracted from income and depending on how many dependents you have and the income after deductions the tax is computed from the tax table.

I have simplified it tremendously. There are many other deductions when owning a house such as property tax. I would see a tax preparer the first year.

Answer 5

In Theory, it works like this (example): you pay $10,000 in mortgage interest, and are in a 33% tax bracket, you save $3,333.

In Practice: In order to have the write off, you must Itemize you deductions (schedule A). Your Itemized Deductions need to exceed the Standard Deduction, or you do not save anything. Your actual tax savings are for the amount above and beyond the Standard Deduction.

For the itemized deductions, you should include State Income taxes, State Property taxes, Mortgage Interest (& Points), Medical Expenses, etc.

Note that if you have refinanced, you MUST amortize the points you paid. Example: you paid $3,000 in points to refinance a 30 year mortgage: you can write off $100/yr over 30 years.

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Answer 6

Yes, your interest and points count as an itemized deduction. However, that doesn't mean that you get it back, it's just that it basically amounts to income that you aren't required to pay taxes on. Your tax rate determines how much of a benefit that is.

Answer 7

It does depend on all other factors. I make $30K and still owe $1200 this year after house taxes, interest, etc. but have no kids.

Answer 8

You can deduct all of it, but that is not the same as 'getting back'. What you get back depends on how much was withheld from your paychecks, minus what you owe in taxes.

Answer 9

You don't get any of it back! You get to claim the interest you paid on the mortgage, but you don't get it back!