It depends on your federal marginal tax bracket. To determine your potential tax savings, add together the cost of mortgage interest and property taxes, and multiply them by your federal marginal tax bracket. For example, if you paid $3,000 in property taxes and $9,000 in mortgage interest, the combined total is $12,000. If you are in the 25% tax bracket, your tax savings would be $3,000 ($12,000 x 0.25).
When you buy a home, you can claim more withholding allowances on Form W-4 at work to have fewer taxes taken out of your paycheck in anticipation of the tax deductions for home ownership. Of course, it should be noted that mortgage interest and property taxes, combined with other tax-deductible items (e.g., charitable donations), must exceed the amount of the standard deduction for your tax filing status (e.g., single and married filing jointly) in order to obtain a benefit for itemizing deductions.
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