This will depend on your specific circumstances. In most situations the answer would be yes, because the amount you save on mortgage interest today, by paying off the mortgage, can be invested to add to your wealth versus subtracting from it. The information below about the itemized deductions for 2017 and 2018 will allow you to see the potential tax benefits if you can itemize deductions.
Generally, if you can itemize deductions then you get a tax break on home expenses of mortgage interest and property taxes. The amount by which your total itemized deductions exceed the standard deduction determine the amount of the tax reduction. If you are in the 15% tax bracket, then anything over the standard deduction reduces your tax liability by 15%.
These are some of the categories that are included in itemized deductions:
- Medical and dental costs above and beyond 7.5% of your AGI
- State, local, real estate, and personal property taxes
- Home mortgage interest
- Charitable donations and gifts
- Casualty or theft losses
- Unreimbursed employee expenses above and beyond 2% of your AGI
2017: The
standard deduction for single taxpayers and married couples filing separately
is $6,350 in 2017, up from $6,300 in 2016; for married couples
filing jointly, the standard deduction is $12,700, up $100 from the prior year; and
for heads of households, the standard deduction is $9,350 for
2017, up from$9,300.
2018: The new tax law nearly doubles the standard deduction amount. Single taxpayers will see their standard deductions jump from $6,350 for 2017 taxes to $12,000 for 2018 taxes (the ones you file in 2019). Married couples filing jointly see an increase from $12,700 to $24,000. These increases mean that fewer people will have to itemize. Today, roughly 30% of taxpayers itemize. Under the new law, this percentage is expected to decrease.
