We're planning to buy a house, but our estimated property tax plus mortgage insurance is only slightly more than our standard deduction, so we do not see much of a tax break. Am I missing something?
by 
crekha
ANSWERS: 1
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The interest you pay to the mortgage company can be deducted. If you break down the monthly mortgage or loan payments one makes, the two largest portions are for interest charges and principle. Principle payments are the portion paying off the actual cost of the house. At the beginning of a 25 or 30 year loan, almost all your monthly payment is going towards the interest and very little is going towards paying off the principle. So, for many people, this interest that you are paying will be a large amount. This large amount of interest you pay, can be deducted from your income on your federal tax return. The mortgage company will send you a report at the end of the year specifying just how much you paid and what it covered. Use this document when you fill out your taxes.
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