willie_52
Member
Cash: $ 2.40
Posts: 11
Joined: 19 Apr 2006
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I find myself in a position that paying off my home may not have been a good thing. I am asked to consider borrowing money on my home to develop deferred interest so that I could lower my taxable income. I believe that I could lower my tax responsibilities from 27% to 15% which is a huge difference. Please correct me if I am wrong but 47,000 or less is taxed at a rate of 15%? Is there a limit on how much defered interest can be claimed in any one year? Are there any traps or pitfalls that I should be aware of before going forward?
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Mon Jun 12, 2006 12:35 pm |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1551
Joined: 13 Mar 2005
Location: Colorado/Florida
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Taxes should not be a #1 factor in financial decisions.
However, mortgage money is CHEEEEAAAAAP and you can get ahead if you invest it, earning more with investments than you pay to borrow it. The tax break is icing on the cake an a part of the overall plan.
In short, generally speaking, paying off a house is a very bad idea which most people do for emotional reasons rather than financial ones.
"Expect me when you see me."
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Tue Jun 13, 2006 12:44 pm |
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willie_52
Member
Cash: $ 2.40
Posts: 11
Joined: 19 Apr 2006
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Thank you for the advice. As was sugested I need to compare interest rates to investment potential. If only the stock market would settle down a touch.
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Tue Jun 13, 2006 6:41 pm |
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LottomagicZ4941
Senior Member
Cash: $ 1.66
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Joined: 02 Dec 2004
Location: Earth
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quote:
Originally posted by Rolo
Taxes should not be a #1 factor in financial decisions.
However, mortgage money is CHEEEEAAAAAP and you can get ahead if you invest it, earning more with investments than you pay to borrow it. The tax break is icing on the cake an a part of the overall plan.
In short, generally speaking, paying off a house is a very bad idea which most people do for emotional reasons rather than financial ones.
Also 401Ks and the like are protected assets. Just ask OJ Simpson. Equity is not if you should say be unethically terminated by an employer like P.V.Y.S.C. who is worse then the fig tree Jesus cursed.
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Fri Jan 12, 2007 5:16 pm |
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Nagelon
New Member
Cash: $ 1.00
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Joined: 09 Dec 2013
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Mortgage loans are generally structured as long-term loans, the periodic payments for which are similar to an annuity and calculated according to the time value of money formulae. The most basic arrangement would require a fixed monthly payment over a period of ten to thirty years, depending on local conditions. Over this period the principal component of the loan (the original loan) would be slowly paid down through amortization. In practice, many variants are possible and common worldwide and within each country.
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Fri Dec 13, 2013 5:58 am |
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littleroc02us
Moderator
Cash: $ 384.35
Posts: 1891
Joined: 09 Feb 2009
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quote:
Originally posted by Rolo
Taxes should not be a #1 factor in financial decisions.
However, mortgage money is CHEEEEAAAAAP and you can get ahead if you invest it, earning more with investments than you pay to borrow it. The tax break is icing on the cake an a part of the overall plan.
In short, generally speaking, paying off a house is a very bad idea which most people do for emotional reasons rather than financial ones.
Not paying off a mortgage to keep a tax deduction isn't mathematically smart. If you have a mortgage where you pay $10,000 a year in interest to the bank and your in the 25% tax bracket, you'll save $2500 on your taxes. So tell me why paying 10k to the bank in interest is a mathematically sound idea in order to get back $2500. I don't know about you but if I had a paid for house, I'd have nothing but disposable income to invest and get mighty weatlhy with much lower risk then borrowed money.
Risk comes from not knowing what you're doing. (Warren Buffet)
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Sat Dec 14, 2013 4:50 am |
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