Home Purchase Tax Calculator 2026 β Mortgage Interest & Property Tax Deductions
Calculate tax savings from buying a home. See mortgage interest deduction, property tax SALT deduction (new $40,000 cap), points deduction, and true after-tax cost of ownership.
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= $80,000 %
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US average ~1.1%; varies by state $
For SALT deduction calculation $
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1 point = 1% of loan; fully deductible year 1 $0
Annual Tax Savings
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Year 1 Mortgage Interest
$0
Annual Property Tax
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Total Itemized Deductions
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Monthly P&I Payment
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True After-Tax Monthly Cost
Tax Deduction Breakdown
How to Use This Home Purchase Tax Calculator
Enter the home price, down payment, interest rate, loan term, property tax rate, state income taxes, your income, and any points paid. The calculator computes Year 1 mortgage interest via amortization, calculates SALT deductions under the new $40,000 OBBBA cap, and shows your net tax savings versus taking the standard deduction.
The Formula
Loan Amount = Home Price Γ (1 β Down Payment %)
Monthly Rate = Annual Rate Γ· 12
Monthly Payment = Loan Γ r / (1 β (1+r)^βn)
Year 1 Interest = 12 Γ Payment β Principal_Year1
Deductible Interest = Interest on first $750,000 of debt
SALT = min(Property Tax + State Income Tax, $40,000)
Total Itemized = Deductible Interest + SALT + Points
Deduction Benefit = max(0, Total Itemized β Standard Deduction)
Tax Savings = Deduction Benefit Γ Marginal Rate
Monthly Rate = Annual Rate Γ· 12
Monthly Payment = Loan Γ r / (1 β (1+r)^βn)
Year 1 Interest = 12 Γ Payment β Principal_Year1
Deductible Interest = Interest on first $750,000 of debt
SALT = min(Property Tax + State Income Tax, $40,000)
Total Itemized = Deductible Interest + SALT + Points
Deduction Benefit = max(0, Total Itemized β Standard Deduction)
Tax Savings = Deduction Benefit Γ Marginal Rate
Example
$400,000 home, 20% down, 6.75% rate, 30-year, 1.1% property tax, $120K income (married):
Loan: $320,000 | Monthly payment: $2,076
Year 1 interest: ~$21,300 | Property tax: $4,400
SALT: min($4,400 + $5,000, $40,000) = $9,400
Total itemized: $21,300 + $9,400 = $30,700
Standard deduction (MFJ): $32,200
Excess above standard: $700 Γ 22% = ~$154 savings (minimal in this case)
Loan: $320,000 | Monthly payment: $2,076
Year 1 interest: ~$21,300 | Property tax: $4,400
SALT: min($4,400 + $5,000, $40,000) = $9,400
Total itemized: $21,300 + $9,400 = $30,700
Standard deduction (MFJ): $32,200
Excess above standard: $700 Γ 22% = ~$154 savings (minimal in this case)
Extended
Rent Equivalent After-Tax Comparison
What monthly rent equals the same after-tax cost as owning this home?
Rent Equivalent Calculator
What monthly rent would cost you the same after taxes as owning this home?
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Rent Equivalent
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Gross Monthly Cost (P&I + Tax)
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Monthly Tax Benefit
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Net Monthly Cost After Tax
30-Year Total Cost Comparison
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Frequently Asked Questions
Can I deduct mortgage interest on my taxes?
Yes, for homes purchased after December 15, 2017, you can deduct mortgage interest on up to $750,000 of debt. For older mortgages, the limit is $1,000,000. The deduction only helps you if your total itemized deductions exceed your standard deduction ($16,100 single / $32,200 married filing jointly in 2026).
What is the SALT deduction cap for 2026?
The State and Local Tax (SALT) deduction cap was raised to $40,000 per year under the One Big Beautiful Budget Act (OBBBA) of 2026, up from the previous $10,000 cap. This covers property taxes plus state income taxes (or sales taxes). Higher SALT deductions significantly benefit homeowners in high-tax states like California, New York, and New Jersey.
Are mortgage points tax deductible?
Yes, mortgage points (also called loan origination points or discount points) paid on your primary residence purchase are fully deductible in the year you pay them. One point equals 1% of the loan amount. Points on refinances are amortized over the life of the loan rather than deducted in full the first year.
How much do I need to itemize to benefit from mortgage interest deductions?
To benefit from itemizing, your total deductions (mortgage interest + property taxes + SALT cap + other) must exceed your standard deduction. In 2026 that is $16,100 for single filers and $32,200 for married filing jointly. In early loan years, mortgage interest is highest, making itemizing more likely to help. On many smaller mortgages, the standard deduction wins.
What is the "true cost of ownership" calculation?
The true cost of ownership adjusts your mortgage payment for the tax savings from itemizing deductions. If your monthly payment is $2,500 but you save $300/month in taxes from deductions, your true after-tax cost is $2,200/month. This is what you compare to rent β not the gross mortgage payment β when deciding whether to buy or rent.