What precentage of mortgage interest is

[TM W]

refunded in taxes

[Mindbender]

Not refunded. There is an amount of interest that is deductible and the percentage would depend upon your tax bracket and your income and mortgage interest paid. Closing costs can be amortized over a period of years and deductible. Additionally depending upon the state you live in, your real estate taxes paid could be deductible. However, unlike stocks and other investments, you cannot deduct the expenses of upkeep on your home, despite the fact that the real estate taxes increase as the county increases the value of your home or as there are referendums in your community. We call that a tax on unrealized capital gains. Over the years, if you calculate what you paid into your house in real estate taxes, mortgage interest, etc. and then deduct the amount of income taxes you saved, you'll probably find that you're in the hole rather than ahead as far as investments go. If you want to be pretty exact about what the deduction might be, get a tax preparing program and do a pseudo-tax form to see the impact based upon your personal information. If you can figure what your taxes would have been in 2006 had you purchased a home and you have your 2006 tax return, you'll be able to figure the true percentage as it fits your income.

[sarge927]

It doesn't work that way, exactly. Here's how it works: You can itemize your deductions instead of taking the standard deduction on your taxes, and you can itemize your mortgage interest, your closing costs, and your property taxes. Those amounts are added together and deducted from your income to determine your taxable income. Trust me, you'll get a much bigger return if you itemize because the standard deduction for a married couple filing jointly is about $11,000.00 right now. You've already cleared $15,000.00 in interest, so you're probably looking at about $25,000,00 in itemized deductions by the time you throw in your closing costs and your property taxes. Doesn't mean your tax return will be twice as big because the taxes are done on a graduated scale, but you will get a lot more back this way.