UnThreaded | Threaded | Whole Thread (8) | Ignore Thread Prev | Next
Author: tlswms One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76106  
Subject: Re: Leveraging Equity Date: 5/20/2004 3:33 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Thanks to all for the suggestions/comments.

I am basically looking at this as a foray into having an asset allocation plan. Everything has been in the market up to now and the inheritance presented an opportunity to have some of our assets in real estate. I'm comfortable with the risks and can ride out not having a renter (the PITI is the same with the refinance – pulling 50k out just reduces the allocation to RE in favor of the market) and the swings in the market - so I think it's a go. However, I do have a little anxiety over the tax implications.

We have never itemized as we have never owned property and hence never had the deductions necessary to beat the standard.

In addition to this inherited property we are about to convert from a construction loan to a mortgage on a vacation home. So, I get two tax-related issues to tackle in my first year as a property owner.

On the inherited home I project that when the property is occupied I'll have a small positive cash flow given the current mortgage – and hence taxable income. If I refi and take cash out the higher proportion of the PITI going to interest will result in a smaller positive cash flow – and maybe even a passive loss, which I'm (foolishly?) viewing as a positive.

On the vacation home I'm thinking it will be considered a primary residence for tax purposes and the mortgage interest will be deductible. We live overseas in govt.- provided housing and plan to continue that until retirement from this lifestyle in 8-10 years. Is this a correct interpretation?

More thoughts welcome – thanks, Tom
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (8) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Apple

Wal-Mart Nixes Apple Pay
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement