Interest Deduction

See: Tax Deduction.

Interest, like rent, is a deductible expense. So if you're a homeowner with a qualifying mortgage (i.e. the interest you pay on the debt on your house is, in fact, tax-deductible), and you have a 40% marginal tax rate, then the $20,000 you paid this year in interest on your loan costs you, on an after-tax basis, more like $12,000, because you can deduct that $20,000 from your taxable income.

Welcome to America and the home-owning dream.