Comments on: Consider this Likely Future Tax Benefit of Early Mortgage Payoff http://toughmoneylove.com/2008/08/15/consider-this-likely-future-tax-benefit-of-early-mortgage-payoff/ The Hard Truth about Money and Personal Finance Tue, 09 Mar 2010 03:39:36 +0000 http://wordpress.org/?v=2.9 hourly 1 By: JimmyDaGeek http://toughmoneylove.com/2008/08/15/consider-this-likely-future-tax-benefit-of-early-mortgage-payoff/comment-page-1/#comment-5376 JimmyDaGeek Tue, 11 Aug 2009 20:31:43 +0000 http://toughmoneylove.com/?p=38#comment-5376 Your arguments are interesting. I expect Roth IRAs will be taxed, just like Social Security. Next, there will be asset testing. Your arguments are interesting. I expect Roth IRAs will be taxed, just like Social Security. Next, there will be asset testing.

]]> By: Atkins http://toughmoneylove.com/2008/08/15/consider-this-likely-future-tax-benefit-of-early-mortgage-payoff/comment-page-1/#comment-2725 Atkins Tue, 24 Feb 2009 02:55:16 +0000 http://toughmoneylove.com/?p=38#comment-2725 I am currently advising a lady who is getting a divorce. She is using a house her husband bought before the marriage (i.e. entirely his), so I explained the notion of imputed rent. He could quite reasonably reduce the alimony or child support by the amount of that rent's market value. By taking money instead of value, she might choose to rent a less costly place. I am currently advising a lady who is getting a divorce. She is using a house her husband bought before the marriage (i.e. entirely his), so I explained the notion of imputed rent. He could quite reasonably reduce the alimony or child support by the amount of that rent’s market value. By taking money instead of value, she might choose to rent a less costly place.

]]> By: Mr. ToughMoneyLove http://toughmoneylove.com/2008/08/15/consider-this-likely-future-tax-benefit-of-early-mortgage-payoff/comment-page-1/#comment-253 Mr. ToughMoneyLove Wed, 03 Sep 2008 18:28:42 +0000 http://toughmoneylove.com/?p=38#comment-253 Stephen - Thanks for your visit and comment. Your suggestion about running the two scenarios in Turbotax is a good one but to complete the analysis they should also run a scenario with the standard deduction so they can see that difference as well. Stephen – Thanks for your visit and comment. Your suggestion about running the two scenarios in Turbotax is a good one but to complete the analysis they should also run a scenario with the standard deduction so they can see that difference as well.

]]> By: Stephen http://toughmoneylove.com/2008/08/15/consider-this-likely-future-tax-benefit-of-early-mortgage-payoff/comment-page-1/#comment-251 Stephen Wed, 03 Sep 2008 18:04:29 +0000 http://toughmoneylove.com/?p=38#comment-251 Reference: The Usual Tax Benefit Argument in Favor of Mortgage Debt? It’s Flawed It is easy to calculate your actual tax savings versus the interest savings by using your tax program (TURBOTAX/TAXPRO/etc.) by simply removing the mortgage interest from the income tax program and compare it to your liability with the mortgage interest. You can compare that to interest charged over the life of the loan. It still amazes me the number of folks that I know that does not understand the true cost of their homes (principle + interest over the life of loan). Stephen Reference: The Usual Tax Benefit Argument in Favor of Mortgage Debt? It’s Flawed

It is easy to calculate your actual tax savings versus the interest savings by using your tax program (TURBOTAX/TAXPRO/etc.) by simply removing the mortgage interest from the income tax program and compare it to your liability with the mortgage interest. You can compare that to interest charged over the life of the loan. It still amazes me the number of folks that I know that does not understand the true cost of their homes (principle + interest over the life of loan).

Stephen

]]> By: Mr. ToughMoneyLove http://toughmoneylove.com/2008/08/15/consider-this-likely-future-tax-benefit-of-early-mortgage-payoff/comment-page-1/#comment-107 Mr. ToughMoneyLove Fri, 22 Aug 2008 22:17:11 +0000 http://toughmoneylove.com/?p=38#comment-107 Lord - Thanks for visiting and your comment (and for agreeing with me!) You are right about the current taxation of SS being a form of means testing but I am concerned that elibility for the benefits themselves will be based on inoome. That's why I advocate owning assets in retirement (home, car) that can provide necessary living benefits (shelter, transportation) without needing taxable income to pay for those benefits. Lord – Thanks for visiting and your comment (and for agreeing with me!) You are right about the current taxation of SS being a form of means testing but I am concerned that elibility for the benefits themselves will be based on inoome. That’s why I advocate owning assets in retirement (home, car) that can provide necessary living benefits (shelter, transportation) without needing taxable income to pay for those benefits.

]]> By: Lord http://toughmoneylove.com/2008/08/15/consider-this-likely-future-tax-benefit-of-early-mortgage-payoff/comment-page-1/#comment-106 Lord Fri, 22 Aug 2008 22:09:21 +0000 http://toughmoneylove.com/?p=38#comment-106 You are basically correct (effective meaning gross marginal, the actual tax difference). Some are in high tax situations and can benefit but most are not and do not. One can view it as an inflation hedge so long as you have a low rate. Means testing of SS has been with us for sometime though with up to 85% subject to income tax for moderate earners. You are basically correct (effective meaning gross marginal, the actual tax difference). Some are in high tax situations and can benefit but most are not and do not. One can view it as an inflation hedge so long as you have a low rate. Means testing of SS has been with us for sometime though with up to 85% subject to income tax for moderate earners.

]]> By: MasterPo http://toughmoneylove.com/2008/08/15/consider-this-likely-future-tax-benefit-of-early-mortgage-payoff/comment-page-1/#comment-60 MasterPo Mon, 18 Aug 2008 13:30:54 +0000 http://toughmoneylove.com/?p=38#comment-60 I agree with your assessment of paying off the mortgage and with all the new taxes and testing for SS in the future. However, I think you're splitting hairs by saying it's a $1500 (your example) benefit. If I were able to continue to get a $1500/mo cash flow that I could spend I would agree. But paying off the debt to fully own something I purchased is not a benefit. At best it's the completion of the transation. I agree with your assessment of paying off the mortgage and with all the new taxes and testing for SS in the future. However, I think you’re splitting hairs by saying it’s a $1500 (your example) benefit. If I were able to continue to get a $1500/mo cash flow that I could spend I would agree. But paying off the debt to fully own something I purchased is not a benefit. At best it’s the completion of the transation.

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