Easiest way to cheat on your taxes?

Captain Morgan · 04-10-2012, 10:07 AM

http://finance.yahoo.com/news/what%E...ur-taxes-.html

Here's one of my biggest problems with the article:

"The mortgage-interest deduction, which lets people deduct the interest they pay on their mortgages, requires the government to essentially write an annual check to everyone with a mortgage".

So freaking ignorant. Let's say you're in the 25% tax bracket. You only get to deduct the INTEREST from your mortgage. Let's say the interest is $10,000 per year. You only save 25% of that which means you've just paid the bank $10,000 in interest to avoid giving the government $2,500. Does that really make sense? Some states also give a property tax deduction for having a mortgage, but that deduction isn't going to be $7,500. Any accountant who tells you to take out a mortgage for a tax deduction is an idiot and you should find another accountant. The mortgage interest deduction only helps the banks make more money because people are freaking idiots and think they're actually getting something out of this.

shmike · 04-10-2012, 10:33 AM

Good explanation, Cap'n.

Every year around tax time I realize how few people have any understanding of how the most simple things work.

tommymac · 04-10-2012, 10:59 AM

funny you mention that. We had an 'accountant" who did our/my taxes a few yrs ago and told me I owed up to 15k dollars. His advice was to have kids and buy either another or a more expensive house. He was promptly told to fuck off and have since found a much better accountant.

I dont think a lot of people get a mortgage for a tax break but more so because they dont have the money to buy a house outright. I just look at the interest as another thing I can deduct, but still plan on paying it off as fast as I can so I dont have to pay all this intrest.

Particle Man · 04-13-2012, 01:26 PM

Quote:

Originally Posted by tommymac

funny you mention that. We had an 'accountant" who did our/my taxes a few yrs ago and told me I owed up to 15k dollars. His advice was to have kids and buy either another or a more expensive house. He was promptly told to fuck off and have since found a much better accountant.

Same here. Went to three different accountants before we found one who wouldn't spout that load of garbage.

fasternyou929 · 04-10-2012, 11:18 AM

Quote:

Originally Posted by shmike

Good explanation, Cap'n.

Every year around tax time I realize how few people have any understanding of how the most simple things work.

I heard another "so-and-so got a raise that put him in a higher tax bracket, so he would have been better off without it" story this week.

anthonyk · 04-10-2012, 11:47 AM

I don't see how the article is ignorant (or incorrect).

Everything they said was totally true.

And taking out a mortgage instead of renting can save some money, assuming you don't get all caught up in pre qualifications and whatnot. If you can get your mortgage payment (including insurance, property tax, etc.) down to what you would have paid in rent, you're gonna save some money at tax time. Especially in those first few years where you're practically paying all interest.

Sure, buying a second house to reduce your taxes is a stupid idea, but it doesn't seem like that's what this article was suggesting.

Sean · 04-10-2012, 12:22 PM

You're building equity instead of paying rent. Assuming your payments are the same, it is a net gain.

shmike · 04-10-2012, 12:30 PM

Quote:

Originally Posted by Sean

You're building equity instead of paying rent. Assuming your payments are the same, it is a net gain.

Sometimes.

You have to assume that your equity builds faster than the markets erode prices.

Also, interest only loans qualify for the interest deduction with no equity building component.

Gas Man · 04-10-2012, 04:23 PM

Quote:

Originally Posted by shmike

Sometimes.

You have to assume that your equity builds faster than the markets erode prices.

Also, interest only loans qualify for the interest deduction with no equity building component.

Yeah I lost $35k on my condo when I moved.... to get into my current house and over the last 5 years the house has sunk about 30% in value regardless that I've refinished the kitchen & 2 bathrooms, resided, and a bunch more improvements... I can only hope that the market recovers 15% while I pay it down 15%...

My investment/accountant guy always tells me to owe taxes at the end of the year... don't let the feds borrow my money cause they don't pay interest.

Krabill · 04-10-2012, 04:10 PM

I got divorced last year and loosing the deductions from being married bumped me up a tax bracket. I went from my usual $4k refund to owing $1k, so I am actually paying $5k more in taxes because of it . . . and I'm still paying the mortgage on the old house . . . and rent for my new place . . . and child support . . . and alimony . . . and even after all that I still have more money left over than I did when my (ex) wife was spending all of my money

04-10-2012, 10:07 AM	#1
Captain Morgan Let's do another U-turn Join Date: Feb 2008 Location: Indiana Moto: 2009 V-Strom Posts: 3,816	Easiest way to cheat on your taxes? http://finance.yahoo.com/news/what%E...ur-taxes-.html Here's one of my biggest problems with the article: "The mortgage-interest deduction, which lets people deduct the interest they pay on their mortgages, requires the government to essentially write an annual check to everyone with a mortgage". So freaking ignorant. Let's say you're in the 25% tax bracket. You only get to deduct the INTEREST from your mortgage. Let's say the interest is $10,000 per year. You only save 25% of that which means you've just paid the bank $10,000 in interest to avoid giving the government $2,500. Does that really make sense? Some states also give a property tax deduction for having a mortgage, but that deduction isn't going to be $7,500. Any accountant who tells you to take out a mortgage for a tax deduction is an idiot and you should find another accountant. The mortgage interest deduction only helps the banks make more money because people are freaking idiots and think they're actually getting something out of this.

04-10-2012, 10:33 AM	#2
shmike Follower Join Date: Nov 2008 Posts: 5,549	Good explanation, Cap'n. Every year around tax time I realize how few people have any understanding of how the most simple things work. __________________ Racing For Smiles

04-10-2012, 04:10 PM	#10
Krabill WERA Yellow Plate Join Date: Nov 2008 Location: Tulsa, OK Moto: 08 WR250R, 12 XTZ1200 Posts: 558	I got divorced last year and loosing the deductions from being married bumped me up a tax bracket. I went from my usual $4k refund to owing $1k, so I am actually paying $5k more in taxes because of it . . . and I'm still paying the mortgage on the old house . . . and rent for my new place . . . and child support . . . and alimony . . . and even after all that I still have more money left over than I did when my (ex) wife was spending all of my money __________________ www.wrrdualsport.com www.designatedvaping.com

04-10-2012, 10:59 AM	#3
tommymac Moto GP Star Join Date: Nov 2008 Posts: 11,022	funny you mention that. We had an 'accountant" who did our/my taxes a few yrs ago and told me I owed up to 15k dollars. His advice was to have kids and buy either another or a more expensive house. He was promptly told to fuck off and have since found a much better accountant. I dont think a lot of people get a mortgage for a tax break but more so because they dont have the money to buy a house outright. I just look at the interest as another thing I can deduct, but still plan on paying it off as fast as I can so I dont have to pay all this intrest.

04-10-2012, 11:47 AM	#6
anthonyk WERA White Plate Join Date: Nov 2008 Location: Austin, TX Moto: '01 Aprilia Falco Posts: 1,041	I don't see how the article is ignorant (or incorrect). Everything they said was totally true. And taking out a mortgage instead of renting can save some money, assuming you don't get all caught up in pre qualifications and whatnot. If you can get your mortgage payment (including insurance, property tax, etc.) down to what you would have paid in rent, you're gonna save some money at tax time. Especially in those first few years where you're practically paying all interest. Sure, buying a second house to reduce your taxes is a stupid idea, but it doesn't seem like that's what this article was suggesting.

04-10-2012, 12:22 PM	#7
Sean giggity Join Date: Nov 2008 Location: socal Moto: street, sumo & dirty Posts: 1,071	You're building equity instead of paying rent. Assuming your payments are the same, it is a net gain.