[quote=HLS]Refinancing a primary is less expensive than a rental.
Either way you end up with the same amount of debt.
It’s the cheapest mortgage money you can get.
Historically, a very small % of people with moderate net worth++ end up in trouble/foreclosure.
Seek a tax professional for tax aspects.
Many people forget about the standard deduction when figuring Itemizing Deductions… The larger your household, the less sense it makes to itemize.
Being a landlord isn’t for everyone, but if you believe that property values will increase, I would think that owning 2 properties with some debt is better than owning one free and clear.
Having hundreds of thousands of dollars (or millions) of equity but not being able to enjoy your life is pointless to me.
Your heirs will appreciate it !
It’s a different perspective than some who want to pay everything off and have no debt later in life..
I’ve known people who died young with lots of equity and others whose health declined that their golden years weren’t so golden,,, But they had no debt, little cash and lots of equity.[/quote]
Really interesting thoughts, guys! I’m going to play with the numbers and see if I can’t make a significant improvement in cash flow moving around the equity.
I absolutely know it’s great to be us, the rise in equity prices made me think we might get to retirement earlier and also stirred the memory of the 2007 housing bubble and not wanting to lose a chance to take some gains off the table.
Thanks for the explanations everyone. I appreciate the thoughtful responses. I’m going to meet with my tax person to discuss. We make $300-310k combined so looks like there are lots of pitfalls to watch out for. A little bummed right now – I know, 1st world problems.
So this is what I’m trying to understand, why is it 29.3% vs. long term capital gains tax? I’ve just started exploring this, but I read 15% or 25% depending on depreciation claw back.
