In New Orleans and Northern Virginia the idea is the same, so I'm sharing this great tip
Via
Eric Bouler (Prudential Gardner):
New Orleans Condos, The mortgage interest deduction on your taxes is a very big deal!
The interest rate deduction on your taxes is a big deal when considering your total cost of ownership. The interest you paid as well as property taxes are deductible on your federal and state income taxes. Let's look at an example of someone in the 25% bracket for federal taxes and 3% for state taxes. Most people hate giving the government more of your hard earned money. Renters miss out on this gift and its a very big gift. The gift gets larger as your tax rates gets steeper.
With a $200,000 mortgage your interest and principal is $1076. The interest for the year one in your loan is $9921. If your combined tax rate is 28% you will realize a tax benefit of $2778. If you break this savings down on a per month basis or $232 per month which is savings to you. Your out of pocket cost is lowered by this amount. This is something that a renter does not get. The taxes are also deductible. If you are a renter the landlord works this into your rent so you are paying for his taxes but get no tax benefit. The higher the rate the more you will save.
The other benefit that often forgotten is that during the first year you have increased your equity by $2963 and paid down the principal by that amount. When you sell you will realize your equity tax free plus any gain if you live in your condo for two years.
You can also look for a $7500 tax break as well if you are a buyer for the first time in the last 3 years. All this is great but people do enjoy having their own place with a chance to improve your property with sweat equity. Think what your out of pocket expenses are when thinking about purchasing your place.
Other recent articles Rent versus Buy, New Orleans Interest Rates fall off Cliff, Its a New Orleans Buyer's Market.
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Often when real estate professionals discuss tax advantages, they neglect to consider that the new homeowner loses the standard deduction - in 2008 this is $10,900 for married couples filing a joint return, $5,450 for singles and married individuals filing separately and $8,000 for heads of household. The tax break is useful only to the extent one's itemized deductions for interest, state/local taxes, and charitable contributions exceed these amounts - so when we state how much someone will save, we better take these into account. We might also want to disclaim to the effect that they should speak with a tax professional (unless you are one).