(Or Does Not Having a Mortgage Cost You Even More Money?)
... pay as much cash as you can for your home, pay it off as soon as possible, and avoid loans of any kind. The general thought behind this is that paying interest on the mortgage is bad. This is the old fashioned way of seeing things and if you want to increase your wealth, it’s time to get with the 21st century and take advantage of the new financial rules and tax laws.
Not knowing these new rules, laws and strategies of the wealthy can and will cost you money.
Let’s take a look at the many ways having a mortgage saves, and actually makes, you money.
Tax benefit #1
According to the IRS, interest can be deducted on loans up to $1,000,000 when they are acquisition mortgages secured against your primary residence, your second home or both. Additionally, you can deduct $100,000 more in home equity on top of the million. These maximum figures are halved for single taxpayers or married taxpayers filing separately. Calculations for determining the limits on these deductions are also explained in that IRD publication.
So wait a minute …
You’re borrowing money, using other people’s money to pay for your home and the interest you’re charged to pay the loan back is tax deductible? Yes. The bank has paid for your home and you don’t have to pay for the interest – which means the cash you still have in your pocket, when invested, will make you money rather than being locked up in equity in your home.
Tax benefit #2
Points paid by a homeowner when acquiring a loan can also be deducted from income. If you closed a purchase money mortgage transaction in which you paid points to a financial institution in order to receive better terms, you may deduct the full amount of the points on your tax return that year. When refinancing your mortgage, points may also be deducted, but the benefit must be amortized over the life of the loan. You’ll notice I said the life of the loan, not the time you own the house. So, if you refinance or pay off that mortgage in any fashion, you may immediately write off all remaining, not-yet-deducted points in that tax year and begin amortizing the additional points paid in getting the new loan. And those are two of the ways you’ll save money.
In Chapter 12 of Stop Sitting on Your Assets, three tax savings benefits and three strategies to harvest tremendous financial wealth are presented. When you use the strategies and tax savings benefits you also position yourself to use these concepts to get to all your retirement fund money FREE OF TAXES.
To see this strategy in action and learn how you can apply these concepts, read STOP SITTING ON YOUR ASSETS. This mind opening book will help you improve your financial outlook and grow your wealth by utilizing assets you already have and taking advantage of 21st century opportunities that didn’t exist a few years ago.
Don’t let the wealthy get wealthier without you. Join their ranks. Check it out in hardcover or audio book at Amazon or Barnes & Noble: Stop Sitting on Your Assets.