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I think that some of the other posters have misunderstood your post. Let me give it a try. As I see it, you're going to pay off the $9000 carpet price in 6 months.

You're deciding between using the no interest Home Depot loan, or the interest but deductible home equity loan.

Here's where you made the wrong turn.

If you charge it at home depot, it'll cost you $9000 (plus or minus a few stamps).

If you take out a home equity loan (let's say at 8% and your tax bracket is 28%), you'll pay:
$9000 in principal
+$360 in interest
-$100.80 in tax deduction

So it costs you more to use the home equity loan, even though you save $100 on your taxes.

I suppose I should consider the 2% interest from having the $9000 in a bank account for 6 months, but you get the drift. It's less than any sales tax you might pay, as is a rebate from using a rewards credit card (I like Discover myself).


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