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Author: dutchman52 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121351  
Subject: Interest on Home Improvements Date: 8/18/2001 2:41 PM
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I would like to know what, if any, home improvement loans offer. We are considering improvements to our existing home and would prefer to use someone else money if the interest is going to be an advantage for tax purposes. I am very heavily taxed and have to file quarterly. I believe this interest on the loan would move us from quarterly filing.

Thoughts about this are greatly appreciated.
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Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53447 of 121351
Subject: Re: Interest on Home Improvements Date: 8/18/2001 3:46 PM
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I would like to know what, if any, home improvement loans offer. We are considering improvements to our existing home and would prefer to use someone else money if the interest is going to be an advantage for tax purposes. I am very heavily taxed and have to file quarterly. I believe this interest on the loan would move us from quarterly filing.

I doubt it. If you're "heavily" taxed, you probably have enough income that the interest on a home improvement loan isn't going to reduce your taxes enough to eliminate the estimated tax requirement. More importantly, who cares if it does or doesn't? If you have income subject to withholding and want to eliminate your ES payments, have your withholding increased. If you're self-employed, you're still going to have to make ES payments unless your total tax is under $1,000, in which case you should stop saying you're heavily taxed.

A home improvement loan is going to leave you with less money in your pocket, even after taxes, than you had before you made the loan payment. This doesn't necessarily mean that it's a bad deal. To find the approximate cost of the loan, multiply the interest by your marginal tax rate and subtract that product from the interest. That's what it's really costing you. (Repeat the process for state income tax, if you have one with itemized deductions.)

Phil Marti
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