PrivClientSG
Guru
- 372
$500k loan at 3% is $15k interest. For those relatively few that still itemize deductions & are in higher tax brackets, that $15k interest could generate $6k in deduction off of other income, bringing cost net loan cost down to $9k. $500k that can stay invested rather than pay off a mortgage only has to net 1.8% or better to cover the loan interest. Anything better than 1.8% is profit. So, even keeping the $500k in a bank CD or NQ MYGA at 5% is substantially better. Even me, a very debt averse person has to talk myself into keeping my mortgage as it is only 2.75% & I still itemize & relatively high tax bracket
When I refinanced and was able to get 3% -- while I knew the answer -- I couldn't help but ask the bank, "Would you loan me a billion at 3%?" LOL. Truthfully, I was surprised that early on in his term, Trump signed off on reducing the mortgage interest deduction cap from $1mm to $750k, and I get that it was all part of the SALT conversation, tax overhaul, etc. I also understand the work-arounds for mortgage interest deductions above 750k, and the real estate taxes, etc. -- but that's something that not only hits the taxpayer, but it hurts them as well. Hit them with a higher tax rate, but taking away, capping, etc., these two benefits -- well, it not only hurts, it hinders business, the economy, provides disincentive for business, larger homes and mortgages, etc. I am probably going to lose my wind/hurricane coverage again, next year, maybe the year after. Even if I meet all the requirements -- I still may not have coverage. My P/C group shopped 20 carriers and every surplus lines, not-admitted, or whatever you call it. CA is in turmoil, FL is second, LA is a very competitive third, and any Gulf state is up there in the running. Real problems here. Thanks.