If you have a mortgage, you may be considering utilizing the mortgage tax deduction when handling your taxes.
Many people attempt to lower their taxable income with the use of deductions and credits. In order to do this, you may want to claim your mortgage interest. Some homeowners plan to use the deduction and hope to benefit from it, so they choose not to pay off their mortgage. You’re likely wondering if it makes more sense to benefit from the savings or get rid of your debt altogether.
Many individuals find that they have enough money to pay off their debts and still have some savings for emergencies, but they’re not sure if they should make this move.
If you choose to pay off your mortgage so that you can be debt free, remember that tax credits are different than deductions. A credit will lower your taxable income and a deduction will lower the percentage of tax that you owe. If you don’t have a mortgage, you may pay more in taxes, but it may still be less than what you’d pay in interest if you had a loan. In this case, it doesn’t make sense to keep a mortgage in order to get the tax breaks.