Quote:
Originally Posted by Locke
This is not entirely true, it depends on the factors surrounding the Mortgage Interest. Mortgage Interest is front-loaded, your first few years into a new mortgage is heavily weighted to interest versus principal and as such, depending on the other factors, a rental could be generating a tax-loss.
|
Which is why it's important to have the proper mortgage on your rental. For example, having a HELOC (home equity line of credit) allows you to pay interest-only, therefore keeping your deductible interest the same year over year, rather than steadily declined on a traditional amortized mortgage. If that's not an option, stretching out your amortization as long as possible has similar results.
Maximize cash flow and maximize tax benefits.
