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# Mortgage Interest Tax Deduction

### This is your tax deduction estimates

Year Amount
1 \$11,167
2 \$10,982
3 \$10,788
4 \$10,586
5 \$10,374
6 \$10,152
7 \$9,920
8 \$9,677
9 \$9,424
10 \$9,158
11 \$8,881
12 \$8,590
13 \$8,287
14 \$7,969
15 \$7,637
16 \$7,289
17 \$6,926
18 \$6,546
19 \$6,148
20 \$5,732
21 \$5,297
22 \$4,843
23 \$4,367
24 \$3,869
25 \$3,348
26 \$2,804
27 \$2,234
28 \$1,639
29 \$1,016
30 \$364

Before you can begin learning how much you are likely to save with a tax deduction on your home, realize how interest is calculated on your mortgage. In the beginning years of your loan, you are paying far more interest on the loan with each payment then you are paying principle on that loan. Your payment is split and the way that it is calculated does not necessarily benefit you but rather the lender. The more principle that is left in your loan, the more interest will build on that principle. Nevertheless, it is important to see that in the first years of your homeownership, you will pay much more interest than principle and that means more likelihood to save money on your taxes in the first years of your mortgage over the later.

### How Much Can You Get?

If you itemize your taxes, then you will likely see a benefit coming from your mortgage interest. A portion of the amount that you paid to interest over the year to your lender is tax deductible. These funds are allowed to come back to you in terms of a tax deduction. Now, the question is, how much can you get back?

The best way to learn this is to punch in your specific loan scenario into a mortgage calculator that is based on tax deductions for mortgage interest. This will give you the exact number that you are likely to get for your tax deduction. Here is an example of what will be the scenario to some people.

If you have a mortgage that is in the amount of \$250,000 and you have an interest rate that is set at 6.5 percent, for a loan term of 30 years, here's what you will get to write off as a tax deduction:

Loan amount: \$250,000
Interest Rate: 6.5 percent
Term: 30 Years

Year One: \$16,167
Year Three: \$15,780
Year Ten: \$13,954
Year Thirty: \$651
Year Two: \$15,980
Year Five: \$15,340
Year Twenty: \$9,386

As you can see, as time goes by you get less of a tax deduction for your interest. The reason for this is quite simply because towards the end of your loan repayment period you are paying nearly all principle and little interest on the loan (you've already paid this during the yearly years of the loan, of course!) Nevertheless, this is a significant write off to not miss on your taxes each year.

Be sure that you take the time to work with your tax professional to learn what you specifically can write off as a deduction on your interest. Not everyone will see the same savings in terms of interest payments and your situation may actually be that you would save more by taking the standard deduction on your taxes. These questions are best left to a professional that can work with your individual situation.