- This topic has 210 replies, 25 voices, and was last updated 13 years, 6 months ago by
earlyretirement.
-
AuthorPosts
-
August 4, 2011 at 8:58 AM #716100August 4, 2011 at 9:09 AM #714902
cvmom
Participant[quote=SK in CV][quote=CA renter]
I’ve often questioned the wisdom of paying a dollar in interest in order to save 30-40 cents in taxes.
Am I missing something?
[/quote]
No, you’re not. You’ve identified something that should be obvious, yet I don’t know how many times I’ve had new clients come to see me, with huge mortgages, and they tell me that their prior CPA told them to buy the most expensive house they could and borrow as much as possible to save taxes. Friggen morons.
It’s simple. If the question is to put another $100K down, or borrow another $100K, if the taxable return on investing the $ is the same as the interest rate on the loan, taxes will be almost exactly the same. (there are some exceptions to this, but those exceptions would certainly not apply in a case where the purchase is a $1M home.) Nobody EVER needs a tax deduction in the form of home mortgage interest. Mortgage interest costs REAL money. It NEVER pays to buy a dollar for dollar deduction. If it did, no one would ever complain about my fees, since they’d be essentially free after taxes.
If someone is fortunate enough to have the flexibility like the OP does, it’s a pure investment decision. Taxes are a variable like they are for all investments. They are usually not the driver. Net return is.[/quote]
SK–this is the most sensible thing I’ve read on the subject in a long time. If you are accepting new clients, could you please PM me your contact information?
August 4, 2011 at 9:09 AM #714993cvmom
Participant[quote=SK in CV][quote=CA renter]
I’ve often questioned the wisdom of paying a dollar in interest in order to save 30-40 cents in taxes.
Am I missing something?
[/quote]
No, you’re not. You’ve identified something that should be obvious, yet I don’t know how many times I’ve had new clients come to see me, with huge mortgages, and they tell me that their prior CPA told them to buy the most expensive house they could and borrow as much as possible to save taxes. Friggen morons.
It’s simple. If the question is to put another $100K down, or borrow another $100K, if the taxable return on investing the $ is the same as the interest rate on the loan, taxes will be almost exactly the same. (there are some exceptions to this, but those exceptions would certainly not apply in a case where the purchase is a $1M home.) Nobody EVER needs a tax deduction in the form of home mortgage interest. Mortgage interest costs REAL money. It NEVER pays to buy a dollar for dollar deduction. If it did, no one would ever complain about my fees, since they’d be essentially free after taxes.
If someone is fortunate enough to have the flexibility like the OP does, it’s a pure investment decision. Taxes are a variable like they are for all investments. They are usually not the driver. Net return is.[/quote]
SK–this is the most sensible thing I’ve read on the subject in a long time. If you are accepting new clients, could you please PM me your contact information?
August 4, 2011 at 9:09 AM #715594cvmom
Participant[quote=SK in CV][quote=CA renter]
I’ve often questioned the wisdom of paying a dollar in interest in order to save 30-40 cents in taxes.
Am I missing something?
[/quote]
No, you’re not. You’ve identified something that should be obvious, yet I don’t know how many times I’ve had new clients come to see me, with huge mortgages, and they tell me that their prior CPA told them to buy the most expensive house they could and borrow as much as possible to save taxes. Friggen morons.
It’s simple. If the question is to put another $100K down, or borrow another $100K, if the taxable return on investing the $ is the same as the interest rate on the loan, taxes will be almost exactly the same. (there are some exceptions to this, but those exceptions would certainly not apply in a case where the purchase is a $1M home.) Nobody EVER needs a tax deduction in the form of home mortgage interest. Mortgage interest costs REAL money. It NEVER pays to buy a dollar for dollar deduction. If it did, no one would ever complain about my fees, since they’d be essentially free after taxes.
If someone is fortunate enough to have the flexibility like the OP does, it’s a pure investment decision. Taxes are a variable like they are for all investments. They are usually not the driver. Net return is.[/quote]
SK–this is the most sensible thing I’ve read on the subject in a long time. If you are accepting new clients, could you please PM me your contact information?
August 4, 2011 at 9:09 AM #715749cvmom
Participant[quote=SK in CV][quote=CA renter]
I’ve often questioned the wisdom of paying a dollar in interest in order to save 30-40 cents in taxes.
Am I missing something?
[/quote]
No, you’re not. You’ve identified something that should be obvious, yet I don’t know how many times I’ve had new clients come to see me, with huge mortgages, and they tell me that their prior CPA told them to buy the most expensive house they could and borrow as much as possible to save taxes. Friggen morons.
It’s simple. If the question is to put another $100K down, or borrow another $100K, if the taxable return on investing the $ is the same as the interest rate on the loan, taxes will be almost exactly the same. (there are some exceptions to this, but those exceptions would certainly not apply in a case where the purchase is a $1M home.) Nobody EVER needs a tax deduction in the form of home mortgage interest. Mortgage interest costs REAL money. It NEVER pays to buy a dollar for dollar deduction. If it did, no one would ever complain about my fees, since they’d be essentially free after taxes.
If someone is fortunate enough to have the flexibility like the OP does, it’s a pure investment decision. Taxes are a variable like they are for all investments. They are usually not the driver. Net return is.[/quote]
SK–this is the most sensible thing I’ve read on the subject in a long time. If you are accepting new clients, could you please PM me your contact information?
August 4, 2011 at 9:09 AM #716110cvmom
Participant[quote=SK in CV][quote=CA renter]
I’ve often questioned the wisdom of paying a dollar in interest in order to save 30-40 cents in taxes.
Am I missing something?
[/quote]
No, you’re not. You’ve identified something that should be obvious, yet I don’t know how many times I’ve had new clients come to see me, with huge mortgages, and they tell me that their prior CPA told them to buy the most expensive house they could and borrow as much as possible to save taxes. Friggen morons.
It’s simple. If the question is to put another $100K down, or borrow another $100K, if the taxable return on investing the $ is the same as the interest rate on the loan, taxes will be almost exactly the same. (there are some exceptions to this, but those exceptions would certainly not apply in a case where the purchase is a $1M home.) Nobody EVER needs a tax deduction in the form of home mortgage interest. Mortgage interest costs REAL money. It NEVER pays to buy a dollar for dollar deduction. If it did, no one would ever complain about my fees, since they’d be essentially free after taxes.
If someone is fortunate enough to have the flexibility like the OP does, it’s a pure investment decision. Taxes are a variable like they are for all investments. They are usually not the driver. Net return is.[/quote]
SK–this is the most sensible thing I’ve read on the subject in a long time. If you are accepting new clients, could you please PM me your contact information?
August 4, 2011 at 3:50 PM #715037SK in CV
Participant[quote=cvmom]SK–this is the most sensible thing I’ve read on the subject in a long time. If you are accepting new clients, could you please PM me your contact information?[/quote]
Thank you. But I’ve not accepted a new client since 2004, and have been succesful in getting rid of all of them except for 1 that just won’t go away :). Currently I’m a CFO for an IT consulting firm, and not even in SD anymore.
August 4, 2011 at 3:50 PM #715128SK in CV
Participant[quote=cvmom]SK–this is the most sensible thing I’ve read on the subject in a long time. If you are accepting new clients, could you please PM me your contact information?[/quote]
Thank you. But I’ve not accepted a new client since 2004, and have been succesful in getting rid of all of them except for 1 that just won’t go away :). Currently I’m a CFO for an IT consulting firm, and not even in SD anymore.
August 4, 2011 at 3:50 PM #715730SK in CV
Participant[quote=cvmom]SK–this is the most sensible thing I’ve read on the subject in a long time. If you are accepting new clients, could you please PM me your contact information?[/quote]
Thank you. But I’ve not accepted a new client since 2004, and have been succesful in getting rid of all of them except for 1 that just won’t go away :). Currently I’m a CFO for an IT consulting firm, and not even in SD anymore.
August 4, 2011 at 3:50 PM #715883SK in CV
Participant[quote=cvmom]SK–this is the most sensible thing I’ve read on the subject in a long time. If you are accepting new clients, could you please PM me your contact information?[/quote]
Thank you. But I’ve not accepted a new client since 2004, and have been succesful in getting rid of all of them except for 1 that just won’t go away :). Currently I’m a CFO for an IT consulting firm, and not even in SD anymore.
August 4, 2011 at 3:50 PM #716243SK in CV
Participant[quote=cvmom]SK–this is the most sensible thing I’ve read on the subject in a long time. If you are accepting new clients, could you please PM me your contact information?[/quote]
Thank you. But I’ve not accepted a new client since 2004, and have been succesful in getting rid of all of them except for 1 that just won’t go away :). Currently I’m a CFO for an IT consulting firm, and not even in SD anymore.
August 4, 2011 at 10:01 PM #715072sdcellar
ParticipantSo, masayako, it looks like you have your answer. There is nothing wrong with putting 50% down on your house. Others might have other strategies, but that doesn’t mean there’s something wrong with yours.
The only other thing I might suggest is making sure you hold on to an adequate cash (or similarly liquid) reserve.
August 4, 2011 at 10:01 PM #715163sdcellar
ParticipantSo, masayako, it looks like you have your answer. There is nothing wrong with putting 50% down on your house. Others might have other strategies, but that doesn’t mean there’s something wrong with yours.
The only other thing I might suggest is making sure you hold on to an adequate cash (or similarly liquid) reserve.
August 4, 2011 at 10:01 PM #715765sdcellar
ParticipantSo, masayako, it looks like you have your answer. There is nothing wrong with putting 50% down on your house. Others might have other strategies, but that doesn’t mean there’s something wrong with yours.
The only other thing I might suggest is making sure you hold on to an adequate cash (or similarly liquid) reserve.
August 4, 2011 at 10:01 PM #715918sdcellar
ParticipantSo, masayako, it looks like you have your answer. There is nothing wrong with putting 50% down on your house. Others might have other strategies, but that doesn’t mean there’s something wrong with yours.
The only other thing I might suggest is making sure you hold on to an adequate cash (or similarly liquid) reserve.
-
AuthorPosts
- You must be logged in to reply to this topic.