– Take 1 year of mortgage interest and divide by 3200.
– The result is the number of dependents you can exclude on your W4. (for example, $32,000 of mortgage interest is like having 10 dependents.)
– Take extra amount you will receive from each paycheck and multiply by the number of paychecks you get in 1 year.
– Result is the part of your tax refund from ownership of that property (and having the deductible mortgage interest).
If you want the extra cash each paycheck, you simply change your W4 with the new exclusions. Note: If you do this, your refund at tax time will be smaller.
