[quote=walterwhite]you’renot really losing a 28,000 writeoff, you’re losing 28,000 minus the standard deduction i think 11,000 that you would other wise get. So we’re really only talking about a 17,000 deduction, or maybe $6,000 a year cash. Is that much money really what makes you an owner v. a renter? I guess it’a about equal to preperty taxes and insurance, maybe a bit less. i don’t know. maybe you would say screw it for 6,000. I would. But a lot of people probably wouldn’t. i just cannot udnerstand how intelligent people still think there is a tax advantage to owning a home. the mortgage deduction seems to perfectly conform to the amount of the proeprty taxes and insurance i’d have to pay, thereby negating any actual savings. It’s all a treading water game.[/quote]
It depends. walter. I mentioned this on another thread, and while it probably doesn’t make sense to in this environment, we had some relatives that in the early 80ies that instead of contribution to a 401k, ATM’ed the hell out of their primary home home and bought a bunch of rental property that cash flowed or broke even.
Their rationale was 401k was just deferring the tax treatment (which they predicted for them would end up being taxed considerably more than during their retirement versus during their working years)…So instead of contributing to a 401k, they heavily refinanced after refinanced their primary home to buy more and more income producing rentals. And post retirement, what they ended up doing was switching each property from one rental back to primary residence, and cashing in on the $500k free cap gains, over the course of 6 years so far. Comparing this to some of their peers who did the traditional 401k/savings route…Those people on are not being forced to take mandatory distributions and on top of that are now going to pay penalties for having to over-withdraw…. I don’t think the issue here is leveraging/atming the hell out of your home. The issue that most americans have is what they do with the cash. They don’t reinvest it but instead blow it on bling and/or overspeculate. But back to your original question. I think from a tax perspective, they enjoyed their mortgage deduction quite well, and on top of that got a free pass on the cap gains…
