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It's not the mortgage interest deduction that phases out, it's itemized deductions overall. For a single filer with an AGI exceeding $142,700, itemized deductions are limited. But before you freak out, the limitation is applied pretty slowly: it's something like 3% of the amount by which your AGI exceeds $142,700 - so with an income of $150K, you would lose $219 in itemized deductions. In the 28% tax bracket, that would cost you all of $61.32.


Note 1: $142,700 was the beginning of itemized deduction limitation for 2004. I expect it will be slightly higher in 2005.

Note 2: Some itemized deductions are not limited: medical expenses, investment interest, casualty/theft losses, gambling losses. Property taxes, income taxes, and mortgage interest are subject to the limit - but again, the limitation is applied very slowly, so for you it won't suck all that much.
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