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I have back and forth, have been my goals. Right now I’m saving for a house / apartment. In essence, I would be debt free, but my parents tell me they have a mortgage to save me in the long run, as I am employed, because otherwise you have to pay thousands more in taxes. Money Is there a resource calculation I can see what makes numerical sense wise? if I save more money with less debt and lower taxes.

2 Thoughts on How to know if you have put more pay or better tax deduction?
  1. Reply
    Rob
    December 28, 2012 at 2:50 pm

    tax mortgage is this.
    u pay bank 10000$ in interest so
    u save 2,500$ in taxes.
    u lose 7500$ to save 2500$
    I’d rather pay tax and have 7500$ .

    Note IRS say less than 40% of
    mortgage holders actually get to take
    discount.

    visit dave ramsey.com to learn fom others
    life lessons so u don’t pay for their stupid
    mistakes.

  2. Reply
    Wayne Z
    December 28, 2012 at 2:55 pm

    Ignore mom and dad on this one.

    You never want to pay interest just to get a tax deduction.

    If you are in the 25% bracket (most middle class Americans are), paying $ 10,000 interest saves you $ 2,500 in taxes ($ 10,000 x 25%).

    Now…..the problem with saving to buy a house with cash is that you are saving towards a moving target that (generally) goes up in value over time. For example, you are trying save $ 100,000 to buy a $ 100,000 house. Unfortunately, by the time you save $ 100,000, the house might now be selling for $ 120,000. Then, buy the time you save $ 120,000, the house might be selling for $ 140,000….and so on.

    However, with today’s low interest rates, borrowing is not a bad idea. Personally, I would buy if you have at least 20% down and mortgage the rest.

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