Hi friends. Thanks for downloading the Money Girl Podcast.

I'm Laura Adams, the author of Money Girls Smart Moves to Grow Rich. To get you ready

for Tax Day, we're bringing you bonus episodes of Money Girl this week in a special three-part

series called Deduction Dangers, where I'll be giving you

tips to avoid common tax mistakes that can cost you.

In this show we'll cover the mortgage interest deduction.

Taking this tax break is one of the best

ways for homeowners to save money on taxes. So if you're a homeowner or you want to

be one someday, listen up. You'll get an overview and three common mistakes you need to

avoid. A tax deduction is an amount you can subtract from your taxable income, which reduces

the amount of tax you have to pay.

When you borrow money to buy, build, or remodel your home, the mortgage interest deduction allows

you to avoid paying tax on the interest. Let's say you get a fixed rate mortgage of $200,000 for 30 years with a 4.5% interest rate.

Your payment for principal and interest would be just over a thousand dollars a month or

12,000 a year. In the first year, the interest portion of your payments would total

over $8,900. If you claim the mortgage interest deduction, that's $8,900 of

your income that won't be taxed. Depending on your tax rate, claiming the deduction could

reduce what you owe or increase your tax refund

by thousands of dollars.

In order to be eligible to take the mortgage interest deduction, you have to meet the

following two conditions.

Number one, you must file taxes on Form 1040 and itemized deductions on Schedule A.

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