Comments on: Pay Off Mortgage, Lose Tax Deduction?

By: Michael

Michael — Fri, 13 Mar 2009 04:41:34 +0000

@Brandon

Good point on the tax brackets being a progressive scale. It’s pretty simple, but I’m surprised by how many people don’t understand it.

For those who are not aware, using the table above, a single person making less than $7,825 will pay 10% in taxes. If that person makes more than that they will still only pay 10% on the first $7,825 and then 15% on the portion that exceeds that, up to $31,850.

By: Brandon

Brandon — Thu, 19 Feb 2009 18:14:43 +0000

you should mention the taxes your have to pay on your “investment”. also, wouldn’t the tax deduction put you in a lower tax bracket?

Also, just because you are in a higher tax bracket does not mean you will be taxed that actual amount. It is a progressive scale. For Example, the first several thousand of your income is only taxed at 10% or so.

your marginal tax rate isn’t really your tax rate, people just misunderstand what it means.

By: John

John — Mon, 19 Jan 2009 13:53:15 +0000

@StingRay: Ouch indeed!

By: StingRay

StingRay — Mon, 19 Jan 2009 01:33:12 +0000

I agree, paying off your home in this market is a wise choice. My problem is I will need to sell company stock to payoff my house with a sizeable capital gains tax disadvantage. I’m trying to determine what my best course of action is. Our stock gets evaluated 4-times a year and I’m sure it will not be favorable this quarter. My estimated Cost Basis is approx $16 more than the current stock value. I would be looking at capital gains tax on $123,000. AT 15% that $18,500 in Taxes…Ouch!

By: Wanda Grindstaff

Wanda Grindstaff — Tue, 09 Oct 2007 14:46:17 +0000

Thank you Thank you Thank you!!!!!
Such an excellent point and very well made. It is simple math! The American homeowner has been duped into believing they should never pay off a mortgage and you have clearly expressed why that is a myth. Not to mention of course the equity in the home and the advantages of it in the future and upon retirement.

By: Dennis K.

Dennis K. — Wed, 03 Oct 2007 07:35:35 +0000

Hmm…did that guy above even read the post? You don’t even talk about selling the home…I think he’s just trying to bump his website rankings.

By: Double Glazing

Double Glazing — Wed, 03 Oct 2007 07:17:02 +0000

Don’t get me wrong, I’m not always in favor of paying off your home, in most cases it needs to be a personal choice you make after you’ve looked at all the options.

I completely agree; selling a home can be a tough decision and a stressful experience; definitely a toll and a personal decision.

Great post, bookmarked this one for later!