get tax logic!

 

just becasue you can file sch A w/ federal doesn't mean you can use itemized deductions w/ state as well.  very simply, the state tax you have paid is not state tax deductible.

as far as what house to buy, it really depends on your income level and local RE mkt.  e.g. I'd buy a little more expensive house if I am young, and make a lot of $$ anuually(seems you do) to pay less income tax down the road.

get a big picture before you make decision.  good luck!