Will I lose my mortgage deduction in 2018 with the increased standard deduction?

[littlefish]

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[mitochondria]

I have tremendous respect for DMFA, but I agree with iradoc. Disclaimer- before the tax reform bill passage, I believed that the mortgage interest write off was an overblown selling point of owning a home.  The financial value of owning a home was precarious before the tax reform.

I would not be to enthusiastic about buying an expensive home for "investment" or "tax benefit" purposes going forward.  Now, if one chooses to live in a nice home that is a little on the high end, then that is OKAY if that is what makes you happy.  My only point is that don't justify that decision by believing that some how the tax write off makes financial sense. This is a nice side perk for what is largely a non-financial decision.

The "appreciation" of your home over time also does not make financial sense (compared to other investment choices) if you are paying a mortgage (I've carefully read DMFA's very logical explanation of not paying off a low interest mortgage above).  Now, if you are paying cash on the spot for a home, then we could potentially make a stronger argument for an appreciating asset (the annual property tax obligation not withstanding).

My experience is that in the real world, young physicians get into first homes that are way to expensive considering their current debt obligations and there is an opportunity cost of not maximizing their tax advantaged accounts early in their careers. A young physician explained to me about a month ago that they were "deprived compared to (their) peers" and they had "suffered enough". Again, I'm not saying don't buy a home, but rather be reasonable. You don't need to pay $500K-$600K to have a "nice" home when you are just getting started at the cost of limping along with your retirement contributions. I'll get off my soap box now...

[q-school]

Not everyone thinks similarly. If early financial independence and retirement is low on their priority list, there may not be a need to “skimp” on house or car purchases. Yes they will take a loss sometimes if they move but again, they can afford to.

Wci emphasizes that most physicians can be financially independent in ten years donor they need to blow off some steam with a nice house that’s their choice.

Some lessons you have to learn the hard way. That’s even assuming that some day they agree. All Our kids likely will not graduate having to financially support their parents. They will likely have little educational debt. They may inherit significant amounts. They will live their own lives and may choose to explore the world differently.

[Slav4ikMD]

Well, for say a 1 mil home with 20% down and a mortgage of 800k, you certainly pay more than 24k in interest in the first few years.  So no, this IS significant.

[ajagannathan]

Slav4ikMD wrote:

Well, for say a 1 mil home with 20% down and a mortgage of 800k, you certainly pay more than 24k in interest in the first few years.  So no, this IS significant.

Click to expand...

Sorry you're right I mis-entered into the amortization calc, even at 4.5% a 30 yr fixed on a 750k loan would be 33k interest the first year.  So 10k SALT max plus that would easily exceed standard deduction for many many years.

[Tina]

Will your state taxes be affected if you take the $24,000 Standard Deduction?  In my state if you take the Federal Standard Deduction then you must take the state's standard deduction which is only $3,000 for married couples filing jointly.     Will I be better off  itemizing deductions on the Federal Tax Return for about $23,000 and then using the same $23,000 itemized deductions on my state tax return?.   Our state tax rate is 6%.