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America's favorite loophole: Mortgage interest

IGBT

IGBT

Lifer
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It?s the real estate that counts
Mortgage and related debt -- but little else -- generates big tax breaks for taxpayers because it is always secured by the property. And you can buy a second home and deduct the mortgage interest (in addition to the real estate taxes on both properties) on it as well. But whether you borrow the money from the bank or your rich cousin, you must be legally liable for the debt.
 
People get so excited over this. "Oh I got to deduct $9000!"

Hey stupid, you still paid $9K in interest! You just got to do it with pre-tax dollars.

If you're stuck paying the interest anyway, by all means deduct it. But put down a larger down payment, buy a cheaper house, do whatever you can to minimize the amount of interest you pay. You should not be happy about shelling out $9K a year in interest.

Also converting unsecured debt to secured debt has some serious potential risks, it's not as simple as comparing interest rates.

Viper GTS
 
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