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Updated over 10 years ago on . Most recent reply

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Andrey Y.
  • Specialist
  • Honolulu, HI
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Cash out refi, simply for interest tax writeoff

Andrey Y.
  • Specialist
  • Honolulu, HI
Posted

Hope everyone is having an awesome Tuesday!

Would you guys do a cash out refi on a property purchased with cash, simply for the purpose of writing off mortgage interest? I believe you can write of interest up to a max of 2 mortgages; someone correct me if I am wrong on this.

This may also help with a future cash purchase of a property. However, its becoming increasingly difficult to find suitable B&H properties in my local area, I don't really need the cash. Would you do it for the tax purposes as I mentioned?

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Adam Moehn
  • Investor
  • Cedar Rapids, IA
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Adam Moehn
  • Investor
  • Cedar Rapids, IA
Replied

If it's purely to be able to deduct the interest on your taxes, it's not a good idea.

An example: You paid $100 in interest, then deducted the $100 from taxes. If we assume a 25% tax rate, then you've reduced your taxes by $25.

So you've paid $100 in interest to save $25 in taxes. That leaves you down $75. If you think that's a good idea then, please, feel free to send me $100 and I'll happily send you $25. :)

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