Mortgage interest is currently deductible and may generate tax benefits. |
Most of us are aware that the interest you pay on your mortgage, if kept to maturity, could be more than the actual amount of the loan. When we look at the amount of wealth transferred to the bank on this type of loan, you certainly want to do everything you can to reduce the amount of the loss. Unfortunately, the way most people go about it, actually begins the construction of even a third house... a house for the federal government. It is the beginning years of ones mortgage that offer you the greatest tax deduction because the monthly payments are mostly interest. If you pay on the principal of the mortgage during those years, you are reducing the amount of your interest deduction and thus increasing the amount of your tax liability. Another thing to consider is the fact that yes you do save financing interest when you prepay your mortgage but you lose investment interest as well. There are many important considerations to look at concerning this issue and at a future meeting [or right now if the client is willing and wants to continue on this topic] we will review the Mortgage Master and get into the numbers. |
No math presented on this screen. |