The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Re: Tax Reduction Ideas Date:  12/27/2000  9:53 PM
Author:  TMFExRO Number:  43523 of 127642

Is it a smart idea to take a larger mortgage just to gain the extra tax deduction?

No. Let's say you're in the 39.6% Federal bracket and an 11% bracket for state. Ignoring limits on itemized deductions at high income levels and the deduction for state taxes on the Federal, every dollar you spend on mortgage interest reduces your overall tax bill by 51 cents. Another way of looking at it is that you're 49 cents poorer for every dollar you spend on mortgage interest.

There may be valid reasons for having a higher mortgage, but saving money isn't one of them.

Phil Marti
Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us