Quote:
Originally Posted by Flames in 07
If you invest in something you can claim any cost associated with the investment against any earning.
IE if you borrow money ( can use your house to back the loan ) all borrowing costs can be written off. That way if you have a 5% loan (or say a second mortgage) and your marginal rate is say 30%, all you need is a 3% return to break even.
It is rediculous to say most people don't have the stones to invest available capital collecting dust in a home. I don't have the stones not to.
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So here's my question, then. If I refinance my mortgage on my rental property, that's tax deferred income of course. So is the interest I'm paying on that new extra piece of my mortgage still tax deductible, even though I may not invest that money? It is, after all, interest from my rental property.
I don't know if I'm making this clear. Let's just say my one and only goal in all of this is to be able to pay off my principal mortgage, and never need to make another mortgage payment ever again. Let's say I have two houses right now, with mortgages of 200k for each of them (to keep it simple). I also have a HELOC of 125k (room to go up to 200k). I have a mortgage on my principal dwelling of 100k. What's to stop me from paying 75k from my HELOC onto my rentals, then refinancing my rentals and paying the money from that onto my principal dwelling? In the end, I have no mortgage, and all of that debt is now spread around my rentals and my HELOC, in essence, taking my non-tax deductible payments on my principal mortgage and turning them into tax deductible payments on my rentals.