Mortgage Tax Savings Calculator
Generally, the interest portion of your monthly mortgage payment is tax deductible. Mortgage discount points, optional extras that you pay to reduce your mortgage rate when you set up a home loan, are also generally tax deductible. However, points paid to agencies or brokers are not deductible. You can consult your tax advisor to determine what your specific tax deductibility will be for your personal financial situation, but in the meantime use the calculator below, which will show you how much money you can save by deducting your interest payments from your taxable income.
Financial Calculators from
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Closing Costs: $4,800.00
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APR after taxes 3.289%
Total Payments $364,814
Mortgage Term 30 years
Original or expected balance for your mortgage. Taxpayers can deduct the interest paid on qualified residences for up to $750,000 in total mortgage debt (the limit is $375,000 if married and filing separately). Any interest paid on first, second or home equity mortgages over this amount is not tax deductible. If you already have outstanding mortgages on other qualified residences, this may limit your deduction. Our calculator limits your interest deduction to the interest payment that would be paid on a $750,000 mortgage.
Annual interest rate for this mortgage.
Interest rate after taxes
Annual effective interest rate, after taxes are taken into account. Please note that in addition to the $750,000 mortgage debt limit; this calculator assumes that your itemized deductions will exceed the standard deduction for your income tax filing status. If your itemized deductions don't exceed your standard deduction, the benefit of deducting the interest on your home will be reduced or eliminated.
|Filing Status||Standard Deduction|
|Married Filing Joint||$24,400|
|Heads of Household||$18,350|
|Married Filing Separately||$12,200|
Term in years
The number of years over which you will repay this loan. The most common mortgage terms are 15 years and 30 years.
Monthly principal and interest payment (PI).
Federal tax rate:
The marginal Federal tax rate you expect to pay. Use the ‘Filing Status and Federal Income Tax Rates’ table to assist you in estimating your federal tax rate.
|Tax Rate||Married Filing Jointly or Qualified Widow(er)||Single||Head of Household||Married Filing Separately|
|*Caution: Do not use these tax rate schedules to figure 2018 taxes. Use only to figure 2019 estimates. Source: Rev. Proc. 2018-57|
|10%||$0 - $19,400||$0 - $9,700||$0 - $13,850||$0 - $9,700|
|12%||$19,400 - $78,950||$9,700 - $39,475||$13,850 - $52,850||$9,700 - $39,475|
|22%||$78,950 - $168,400||$39,475 - $84,200||$52,850 - $84,200||$39,475 - $84,200|
|24%||$168,400 - $321,450||$84,200 - $160,725||$84,200 - $160,700||$84,200 - $160,725|
|32%||$321,450 - $408,200||$160,725 - $204,100||$160,700 - $204,100||$160,725 - $204,100|
|35%||$408,200 - $612,350||$204,100 - $510,300||$204,100 - $510,300||$204,100 - $306,175|
|37%||Over $612,350||Over $510,300||Over $510,300||Over $306,175|
State tax rate:
The marginal state tax rate you expect to pay.
Loan origination percent
The percent of your loan charged as a loan origination fee. For example, a 1% fee on a $120,000 loan would cost $1,200.
Total number of "points" purchased to reduce your mortgage's interest rate. Each "point" costs 1% of your loan amount. As long as the points paid are not a broker's commission, they are considered tax deductible in the year that they were paid.
Any other fees that should be included in the APR calculation. These fees can vary by lender, but at a minimum usually includes prepaid interest.
Annual Percentage Rate (APR)
A standard calculation used by lenders. It is designed to help borrowers compare different loan options. For example, a loan with a lower stated interest rate may be a bad value if its fees are too high. Likewise, a loan with a higher stated rate with very low fees could be an exceptional value. APR calculations incorporate these fees into a single rate. You can then compare loans with different fees, rates or different terms.
APR after taxes
Annual percentage rate after taxes are taken into account. Unlike your after-tax interest rate, the APR after taxes takes closing costs into account.
Why use the Mortgage Tax Savings Calculator?
The mortgage tax savings calculator will calculate what your potential tax savings are based on the mortgage rate you will pay on your home loan and the number of points that you pay. It also takes into account the Federal and State tax rates that you pay. If you click Federal tax rate, a useful popup will appear, displaying a table of the current Federal tax rates depending on your income and circumstances.
The calculator is also useful as it enables you to take into account your closing costs, such as origination fee (the percentage of your loan which is paid to the lender up front alongside the deposit) and mortgage points. This in turn gives you a calculation of your potential APR, both before and after tax. Once all of your information is in the calculator, you can click "Calculate" to see a brief analysis of your first year tax savings, or click "View Report" for a detailed breakdown including your average savings over the term of the loan.
How to use the Mortgage Tax Savings Calculator
Confused? Here's what you do:
- Enter the amount you intend to borrow by using the sliders or typing into the white box
- Choose your mortgage term from the drop-down menu
- Specify the interest rate you will be paying on your mortgage
- Add your Federal and State tax rates – click on where it says Federal tax rate if you aren’t sure what yours is
- Click the [ ] button to expand the Closing Costs section and add the relevant details
- Click View Report.
Who is this Calculator for?
This calculator is most useful if you:
- Want to save yourself money by deducting your interest payments from your taxable income
- Are filing your tax return and want to know how much you will be saving
- Need to know your APR, before and after tax
I’m pleased with the result; what next?
If you're satisfied with the calculator’s result , the next step is to get in touch with potential lenders and begin the process of obtaining a mortgage loan. But rather than do that yourself, why not let us do the hard part for you? Simply click "Get FREE Quote," answer a few brief questions and our trusted lending partners will evaluate your financial profile and contact you directly with their best offers. It couldn't be easier; the lenders come to you, so you don’t need to go to them!
Is it worth paying for mortgage discount points?
This depends on a number of factors, particularly the amount you are borrowing, the interest rate, and the term of the loan. Take a look at our Mortgage Points Calculator – this tool will help you to understand clearly whether or not buying mortgage points is the right decision, depending on your own circumstances. There’s not one solution to suit everyone, so use this free calculator to ensure you are making the best decision for yourself.
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