I did consider the AMT in my scenario above. AMT does not affect the interest deduction, only property taxes.
My biggest fear with the AMT is the ‘patch’. The baseline AMT deduction is around $45K. Congress has patched it 3 years running to $69K. No patch for 2009 and my tax liability would go up over $6K.
While I agree you should not spend money (interest) just to get the tax deduction, it is mis-guided to call it a ‘farce’. It’s worth $800 a month in my $900K house scenario – that’s money I would be spending anyway.
