“A mortgage casts a shawdow on the sunniest fields” -R.G. Ingersoll -Illinois farmer, 1877-
The mortgage deduction has been looked upon by millions of Americans as a gift, a saving grace, a wealth creation strategy and a nice paycheck because homeowners are allowed to deduct their interest payments and reduce their tax liability. Most homeowners look at that as a plus by having a large mortgage. “Some accountants believe the best thing to do tax wise is to keep your mortgage as large as possible for as long as possible.” (Own Your Home Years Sooner without making extra interest payments)
However, consider this scenario from a book I found by Harj Gill (Own Your Home Years Sooner) without making extra interest payments
In this scenario Person A does not have a mortgage and Person B does. The circumstances for both individuals are exactly the same. Check out the numbers for yourself, show it to your accountant, financial advisor, etc. and you decide.
Person A paid $3,123 (13,896-10,773) more in taxes than Person B but still had $8,444 (51,104-42,660) more in their pocket than their counterpart who has a mortgage and received a tax benefit of $11,567.
Monetary Advantage +58,444
Please be aware I’m just playing devil’s advocate here if you will. I am not saying get rid of the mortgage deduction, Congress is proposing that as we speak for their own agenda and the National Association of Realtors want to keep the mortgage deduction in place because they see it as a benefit to the American homeowners. However, here is a monkey wrench thrown in by a third party, Harj Gill, who looks at it differently. Hmmm.
Do your own research and draw your own conclusion.
The better question to ask may be if Americans do lose the mortgage deduction will it really make a difference if they may get to keep more money in their pocket?
After all don’t the rich say, “It’s not what you make, it’s what you KEEP?” Hmmm.