Cash out refi, simply for interest tax writeoff
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?
Most Popular Reply
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. :)