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March 1, 2012 at 10:14 AM #739030
enron_by_the_sea
Participant

Don’t forget that if you can pay off Mello Roos with a HELOC then HELOC interest is tax deductible while Mello Roos is not!

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Disclaimers

1. If you are hit with (Federal) AMT then it does not help
2. Most people can not get HELOC unless they put more than 20% down (due to 80% CLTV rule). For those cases it is better to put only 20% down and pay off Mello Roos out of pocket. You still get extra tax deduction due to extra Mortgage interest paid .. (which might go away in “tax reform of 2013”!) This route does not get affected by AMT!

Based on what I am reading, if you live in a high MR McMansion, you are sure to live there forever, if you fall in high tax bracket and if you have extra 50K lying around; this looks like a very attractive investment!