This subject deserves a full analysis and report, something that will be forthcoming. In the interim, this will serve as a high level lesson why the statement “I don’t want to pay my mortgage off quicker because I’ll lose my tax deduction” is made without proper thought. I’m not a tax consultant and always say that you should seek advice of someone qualified in that area, but when I acquired my first home and considered whether to pay it off as soon as possible, I very quickly brushed over any thought that a mortgage interest tax deduction would be a reason not to do so.
My logic went as follows: For each dollar I pay in interest, the I.R.S. will give me a $1 deduction. I don’t recall my marginal tax rate at the time, so will use 28% for this example. I’ll state it clearly: the I.R.S. will reduce my tax by 28c for every dollar I pay in mortgage interest so my interest payment will be 72c instead of $1. For a 30 year mortgage, is it really more appealing to pay 20 more years of 72c per $1 if I can pay off my mortgage in 10 years? This is called a no-brainer! tax check


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