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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?
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?
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?
ParticipantHooray for downsizing! Since we (family of 4) moved from 3100 to 1300 sq ft a year and a half ago, we have missed NONE of our “stuff”. In fact, my (many fewer) cabinets are much more empty…and it’s a lot easier to find the stuff we DO need. It is worth the effort to pare the possessions that somehow just seem to procreate like rabbits in the cabinets.
And another hooray for fiscal responsibility, which does not necessarily = conservatism. I am a liberal who believes in paying my own way and not buying things if you don’t have the $ (not credit) to buy them. Including real estate.
ParticipantHooray for downsizing! Since we (family of 4) moved from 3100 to 1300 sq ft a year and a half ago, we have missed NONE of our “stuff”. In fact, my (many fewer) cabinets are much more empty…and it’s a lot easier to find the stuff we DO need. It is worth the effort to pare the possessions that somehow just seem to procreate like rabbits in the cabinets.
And another hooray for fiscal responsibility, which does not necessarily = conservatism. I am a liberal who believes in paying my own way and not buying things if you don’t have the $ (not credit) to buy them. Including real estate.
ParticipantHooray for downsizing! Since we (family of 4) moved from 3100 to 1300 sq ft a year and a half ago, we have missed NONE of our “stuff”. In fact, my (many fewer) cabinets are much more empty…and it’s a lot easier to find the stuff we DO need. It is worth the effort to pare the possessions that somehow just seem to procreate like rabbits in the cabinets.
And another hooray for fiscal responsibility, which does not necessarily = conservatism. I am a liberal who believes in paying my own way and not buying things if you don’t have the $ (not credit) to buy them. Including real estate.
ParticipantHooray for downsizing! Since we (family of 4) moved from 3100 to 1300 sq ft a year and a half ago, we have missed NONE of our “stuff”. In fact, my (many fewer) cabinets are much more empty…and it’s a lot easier to find the stuff we DO need. It is worth the effort to pare the possessions that somehow just seem to procreate like rabbits in the cabinets.
And another hooray for fiscal responsibility, which does not necessarily = conservatism. I am a liberal who believes in paying my own way and not buying things if you don’t have the $ (not credit) to buy them. Including real estate.
ParticipantHooray for downsizing! Since we (family of 4) moved from 3100 to 1300 sq ft a year and a half ago, we have missed NONE of our “stuff”. In fact, my (many fewer) cabinets are much more empty…and it’s a lot easier to find the stuff we DO need. It is worth the effort to pare the possessions that somehow just seem to procreate like rabbits in the cabinets.
And another hooray for fiscal responsibility, which does not necessarily = conservatism. I am a liberal who believes in paying my own way and not buying things if you don’t have the $ (not credit) to buy them. Including real estate.
ParticipantYou’re probably not doing too badly–but so much depends on your dependents, the lifestyle you want in retirement, whether or not Social Security and (especially) Medicare will exist in 20 years, etc.
One thing I would suggest is to pull up one of the many retirement savings calculators that are online and run your numbers.
ParticipantYou’re probably not doing too badly–but so much depends on your dependents, the lifestyle you want in retirement, whether or not Social Security and (especially) Medicare will exist in 20 years, etc.
One thing I would suggest is to pull up one of the many retirement savings calculators that are online and run your numbers.
ParticipantYou’re probably not doing too badly–but so much depends on your dependents, the lifestyle you want in retirement, whether or not Social Security and (especially) Medicare will exist in 20 years, etc.
One thing I would suggest is to pull up one of the many retirement savings calculators that are online and run your numbers.
ParticipantYou’re probably not doing too badly–but so much depends on your dependents, the lifestyle you want in retirement, whether or not Social Security and (especially) Medicare will exist in 20 years, etc.
One thing I would suggest is to pull up one of the many retirement savings calculators that are online and run your numbers.
ParticipantYou’re probably not doing too badly–but so much depends on your dependents, the lifestyle you want in retirement, whether or not Social Security and (especially) Medicare will exist in 20 years, etc.
One thing I would suggest is to pull up one of the many retirement savings calculators that are online and run your numbers.
ParticipantThanks very much–I will save this thread!!
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