Comments on: The Mortgage Deduction and Taxes http://allfinancialmatters.com/2006/10/18/the-mortgage-deduction-and-taxes/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Fri, 20 Nov 2009 19:56:44 -0800 http://wordpress.org/?v=abc hourly 1 By: Question From a Reader: What to do With My Mortgage?—AllFinancialMatters http://allfinancialmatters.com/2006/10/18/the-mortgage-deduction-and-taxes/comment-page-1/#comment-226403 Question From a Reader: What to do With My Mortgage?—AllFinancialMatters Mon, 04 Feb 2008 21:57:17 +0000 http://allthingsfinancialblog.com/?p=1261#comment-226403 [...] The Mortgage Deduction and Taxes [...] [...] The Mortgage Deduction and Taxes [...]

]]> By: Confused Ann http://allfinancialmatters.com/2006/10/18/the-mortgage-deduction-and-taxes/comment-page-1/#comment-91820 Confused Ann Tue, 27 Mar 2007 01:01:31 +0000 http://allthingsfinancialblog.com/?p=1261#comment-91820 Please Advise! I want to buy a car and remodel my home. I will need $120,000 to buy the car and remodel. For tax deduction purposes, should I get the entire amount as a home loan? Or should I break it down and get separate loans? Which would be more adventageous? Car loan = 4.25% rate verses home loan = 6.5% Please Advise!

I want to buy a car and remodel my home. I will need $120,000 to buy the car and remodel. For tax deduction purposes, should I get the entire amount as a home loan? Or should I break it down and get separate loans? Which would be more adventageous?

Car loan = 4.25% rate verses home loan = 6.5%

]]> By: AllFinancialMatters » Blog Archive » More on Mortgages: 10 Great Reasons to Carry a Big, Long Mortgage http://allfinancialmatters.com/2006/10/18/the-mortgage-deduction-and-taxes/comment-page-1/#comment-85351 AllFinancialMatters » Blog Archive » More on Mortgages: 10 Great Reasons to Carry a Big, Long Mortgage Thu, 08 Mar 2007 17:54:35 +0000 http://allthingsfinancialblog.com/?p=1261#comment-85351 [...] Another plus to a mortgage as long as you can itemize your deductions. For more on this, check out this post from last October. [...] [...] Another plus to a mortgage as long as you can itemize your deductions. For more on this, check out this post from last October. [...]

]]> By: Mike http://allfinancialmatters.com/2006/10/18/the-mortgage-deduction-and-taxes/comment-page-1/#comment-34434 Mike Sat, 21 Oct 2006 02:36:58 +0000 http://allthingsfinancialblog.com/?p=1261#comment-34434 I would point out that in the example you've given, only $5700 of the mortgage interest is really reducing your taxable income. The $5700 is the difference between $16000 and the standard deduction of $10300. Once the mortgage balance is paid down and the mortgage interest drops, and the standard deduction increases with inflation, mortgage interest will not reduce the tax bill. I would point out that in the example you’ve given, only $5700 of the mortgage interest is really reducing your taxable income. The $5700 is the difference between $16000 and the standard deduction of $10300.

Once the mortgage balance is paid down and the mortgage interest drops, and the standard deduction increases with inflation, mortgage interest will not reduce the tax bill.

]]> By: Stacey http://allfinancialmatters.com/2006/10/18/the-mortgage-deduction-and-taxes/comment-page-1/#comment-33897 Stacey Thu, 19 Oct 2006 00:36:51 +0000 http://allthingsfinancialblog.com/?p=1261#comment-33897 Just an aside that I've mentioned in previous posts: itemized deductions start to phase out at higher income levels...3% of adjusted gross income exceeding $145,950 (or thereabouts...I haven't looked lately) for married couples is subtracted from your itemized deductions. Of course, there's no reduction if you simply take the standard deduction. So, for high-earners, mortgage interest deduction (and charitable, RET, state taxes, etc.) may be reduced. Just an aside that I’ve mentioned in previous posts: itemized deductions start to phase out at higher income levels…3% of adjusted gross income exceeding $145,950 (or thereabouts…I haven’t looked lately) for married couples is subtracted from your itemized deductions. Of course, there’s no reduction if you simply take the standard deduction. So, for high-earners, mortgage interest deduction (and charitable, RET, state taxes, etc.) may be reduced.

]]> By: S/100/30 http://allfinancialmatters.com/2006/10/18/the-mortgage-deduction-and-taxes/comment-page-1/#comment-33840 S/100/30 Wed, 18 Oct 2006 20:41:59 +0000 http://allthingsfinancialblog.com/?p=1261#comment-33840 Other than the fact that the term "fair and balanced" makes my eyes roll out of my head - :) - I think it's a great post. Many pf bloggers talk too much in generalities, but you're good at breaking down the numbers. Other than the fact that the term “fair and balanced” makes my eyes roll out of my head – :) – I think it’s a great post. Many pf bloggers talk too much in generalities, but you’re good at breaking down the numbers.

]]> By: JLP http://allfinancialmatters.com/2006/10/18/the-mortgage-deduction-and-taxes/comment-page-1/#comment-33835 JLP Wed, 18 Oct 2006 20:29:58 +0000 http://allthingsfinancialblog.com/?p=1261#comment-33835 Walter, I'm not advocating that a person have a mortgage just so they can get a tax break. Rather, the tax break is just a benefit of having the mortgage as it reduces the cost of the mortgage. Walter,

I’m not advocating that a person have a mortgage just so they can get a tax break. Rather, the tax break is just a benefit of having the mortgage as it reduces the cost of the mortgage.

]]> By: Walterg http://allfinancialmatters.com/2006/10/18/the-mortgage-deduction-and-taxes/comment-page-1/#comment-33834 Walterg Wed, 18 Oct 2006 20:17:25 +0000 http://allthingsfinancialblog.com/?p=1261#comment-33834 This doesn't add up to me. I pay out $13,000 in interest in order to get back $1,375 in tax savings? So if I don't pay the interest and don't get the tax break then I come out with $11,625 (13000-1375) to save/investest, spend, etc. I only say this to point out that having a mortgage just for the tax break doesn't make sense. This doesn’t add up to me. I pay out $13,000 in interest in order to get back $1,375 in tax savings? So if I don’t pay the interest and don’t get the tax break then I come out with $11,625 (13000-1375) to save/investest, spend, etc.
I only say this to point out that having a mortgage just for the tax break doesn’t make sense.

]]> By: Rich Slick http://allfinancialmatters.com/2006/10/18/the-mortgage-deduction-and-taxes/comment-page-1/#comment-33818 Rich Slick Wed, 18 Oct 2006 19:21:16 +0000 http://allthingsfinancialblog.com/?p=1261#comment-33818 Same here Don but what has me tipping in favor of paying it off, in part, is because of the new bankruptcy laws. You can shield wealth from bankruptcy (and lawsuits) if you pour your wealth into your home. Prior to bankruptcy law, there were no limits or time frames but with the new law there are limits and you must live in your home for at least 41 months in order to shield the home equity (wealth) you've built up. No, I'm not planning on filing for bankruptcy nor am I planning on being sued but it's a nice precaution to have in worst case scenarios. I could always tap the home equity via home equity loan. Yes, the interest rates on HELOCs are higher than a fixed but aren't we just discussing here how great a tax write off home interest loans are? Same here Don but what has me tipping in favor of paying it off, in part, is because of the new bankruptcy laws. You can shield wealth from bankruptcy (and lawsuits) if you pour your wealth into your home. Prior to bankruptcy law, there were no limits or time frames but with the new law there are limits and you must live in your home for at least 41 months in order to shield the home equity (wealth) you’ve built up.

No, I’m not planning on filing for bankruptcy nor am I planning on being sued but it’s a nice precaution to have in worst case scenarios. I could always tap the home equity via home equity loan.

Yes, the interest rates on HELOCs are higher than a fixed but aren’t we just discussing here how great a tax write off home interest loans are?

]]> By: Don http://allfinancialmatters.com/2006/10/18/the-mortgage-deduction-and-taxes/comment-page-1/#comment-33792 Don Wed, 18 Oct 2006 17:25:53 +0000 http://allthingsfinancialblog.com/?p=1261#comment-33792 RichSlick: I am considering paying my mortgage off as well but I decided to leave the cash in CDs for now (maybe bonds later). It just seems to make more sense to me as long as I have a substantial income. I get the deduction. I am earning a better rate on CDs that I pay on the mortgage and the CDs are essentialy risk free. I can pay off anytime I want. RichSlick:

I am considering paying my mortgage off as well but I decided to leave the cash in CDs for now (maybe bonds later). It just seems to make more sense to me as long as I have a substantial income. I get the deduction. I am earning a better rate on CDs that I pay on the mortgage and the CDs are essentialy risk free. I can pay off anytime I want.

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