Make 200K Pay bank 30K in interest Write off that 30K and get taxed 40% on 170K Pay taxing entity 68K Take home 102K. Make 200K Get taxed 40% on 200K Pay taxing entity 80K Take home 120K. EDIT>>> Use the savings to move somewhere you're not being taxed 40%!!!
Your scenario also assumes you have liquid cash to pay off your home immediately. And to incur $30k of interest in a year, its going to be a big mortgage. I've done the math every way you can imagine. I like my scenario on a 15 yr note, saving those 15 years, taking the tax break, rather than paying all towards my mortgage and delaying any savings. This isn't hard to do if you do the calculations realistically.
I wasn't even going to respond to the post as it basically presupposes that you can get a house for free. I'm not sure where in scenario #2 above he's running the cost of his house through his P&L; yes, if someone just gives you a house, much better to do that than to buy one with (or without) interest Here's a scenario - by paying cash for the house you end up costing yourself about $400K at the end of 30 years.
Point taken; I changed the tax rate to be more representative (although the simple example wasn't designed to take specific tax laws into account and was meant to be illustrative). BTW, fuck the AMT.
It's a 1031 exchange. I deal with them frequently. There is a local attorney (Steve Robison) that specializes in these. Very affordable - he owns a nationwide company that does only 1031 deals: https://www.spe1031.com/. You need a straw man to authenticate for IRS purposes. Use him or one like him - much cheaper than a general practitioner.
You're assuming a 6 percent guarantee on the DJIA. Your logic is fail. You go right ahead and pay your bank interest so that you can write it off. Fine by me. Are you also calculating writing off your principal payment?
well the DJIA is already up 1% this morning, NASDAQ set a record at 6K I'm also not sure how my numbers would work out in any of your scenarios or spreadsheets, I have a 232K mortgage @ 3.75% and I make about 30K in taxable income which puts me in the 15% bracket.
The Market is a LONG term strategy. Buying a home is NOT an investment, it is controlling your living expenses. The home pay off makes that 'payment' money available, every month that you continue to live there. Say $25. K a year, for the folks living in major urban/suburban areas. What could you do with 25. K a year ? That adds up to a second (or third) rental property fairly quick, @ 8% annual return. Your investment is is still there when you decide to get out (albeit at probably more than 3.% annualized growth). Some people think it is clever to let other people make their mortgage payments. YMMV. Understand that the market has MILLIONS of people that make their living offering insight into how to be successful in it, instead of making their living on their successful investments...
I'm not sure what you're asking. Over the life of a 30 year mortgage using your numbers, you'll have $392K more in your pocket by NOT prepaying on your mortgage. That $392K figure does not change based on the value(s) in cell C2 (the amount of cash).
Not sure where it said anything about being linear or guaranteed; regardless, best of luck to all on this thread - hopefully we all reach our individual investing goals
OP : whatever you do, don't take the advice of a bunch of anonymous yayhooz on an internet forum... To include anything that I have posted.
What is the "Return on DIA" line on your spreadsheet? Do you have it in there on every line? Does it ever change?
No, you can deduct both. I am only deducting rental home interest now because the Standard Deduction is so large. Although I am still waiting for Trump to double it.
You could, and I assume I did. I haven't looked at my brokerage accounts since I retired from managing money. The three guys that are managing my money now we're almost as good as me.