What if you can’t deduct mortgage interest because you keep hitting against AMT? People who can afford $600k houses are upper income and are more likely to run into this problem, in particular if you are single and have investment income as well as salary based income.

Mortgage interest and PMI on your primary residence are deductible for AMT purposes. (Property tax and state tax are not, unfortunately) If you’re hitting against AMT, it could even be beneficial to own. One dollar spent on mortgage interest reduces AMT by 26 cents, but it only reduces your regular tax by 15 or 25 cents, depending on tax bracket.

There is a neat tax calculator on http://www.hrblock.com/. Type in a few numbers and it will tell you right away how much you owe in taxes. It even knows how to calculate AMT. You can easily find out how much of a federal tax benefit you would get from owning a house.