<human>: My girlfriend and I are about to buy our first house and in order to hit the 20% down payment with some savings left over, I will be cashing my 30 year government bonds (EE, 30k worth - probably 20k accrued interest iirc).  We are trying to plan this out so we don't get absolutely raped on taxes, and we are hoping that PF can lend some insight into the hit we can expect to take, and what the best course of action would be in terms of paying the mortgage for the next 6 months of the tax year.

GF's accountant said that she should pay all of the mortgage to offset what she owes in taxes from her job. She will probably owe on her taxes and I will probably get some back (from work alone).  But since the bonds' interest is heavily taxed, we are wondering if I should instead pay the mortgage to write off the hit I would take from cashing them in.

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<bot>: she makes 120k and owes on her taxes. I make 50k and get back on my taxes.  I am cashing in 30k worth of bonds - who should pay the mortgage to mitigate what we owe on taxes.