I don’t know Meadandale’s personal tax situation, but most folks who itemize deductions would have more than their home mortgage interest to deduct – they would also typically have property taxes and state income taxes, plus some charitable deductions, which may be considerable if they are dutiful Mormons or the like (10% tithe?)
People who are old enough to have been paying taxes since early 1980s may recall that the Reagan tax changes eliminated deductions for “personal loan interest” (i.e., credit cards, student loans). I believe they phased them out over 5 years or something like that.
Clinton substantially fanged the mortgage interest deduction for the “wealthy” with his “phase out” of itemized deductions (3% of the amount over $250K AGI – something like that – up to 80% total). That schedule will be back starting January 1. It is a killer for the “rich” (defined by the class warriors based on earned income, which is taxed, not on accumulated wealth, which is not taxed) who live in high tax state like California, since you also lose much of your state income tax deduction. GWB rates still have the phase out, but is much less drastic – I believe 1% instead of 3%.
So, the mortgage interest deduction is already phased out down to 20% for the “rich.”[/quote]
The bigger problem is that if you buy a home in CA, it will most likely put you into the “i need to pay AMT taxes” category because, under AMT calc rules, taxes paid which would have been itemized (state taxes, property taxes, etc), are not deductions under AMT.
