Pay off the mortgage?

[Anonymous]

I know I will eventually have to pay my accountant $150/hour to ask this, but I thought I would ask you all here in the meantime to get your advice.

We will be in the position to pay off our mortgage within a year or so. But then we lose certain tax advantages. Are there options we have to avoid losing these? Thanks!

[Anonymous]

What is your interest rate? If it is low, it probably makes much more sense to just invest the money. Plus, you will still get your tax deduction.

[Anonymous]

Anonymous wrote:What is your interest rate? If it is low, it probably makes much more sense to just invest the money. Plus, you will still get your tax deduction.

+1. There was a column in the Post real estate section over the weekend about this. OP, maybe you can find it -- it's a pretty good breakdown of the pros and cons.

[Anonymous]

We paid ours off when the balance hit $60K and the tax deduction was less than $4k. No point paying $1 interest just to deduct 30 cents.

[Anonymous]

Check out similar threads on this topic on Money and Finance. What's your tax bracket? How old are you? How much emergency savings do you have?

[Anonymous]

Take it to Money and Finance, you won't get much help here.

[Anonymous]

I am extremely risk averse and I plan on paying off after I have emergency fund saved.

Tax deduction means nothing to me. Like 10:12 said, no sense to pay the bank $1 to save $0.30 from Uncle Sam.

I know people say it's better to invest but this is money that I cannot afford to lose. Not one cent. Thus paying off the mortgage seems like the best option.

[Anonymous]

The tax advantage really isn't there when you have low interest rates and you are well into your mortgage and paying more principle than interest.

[Anonymous]

It really depends.

Do you have any other debt at higher interest rates?

Do you have an emergency savings account?

[Anonymous]

Anonymous wrote:I am extremely risk averse and I plan on paying off after I have emergency fund saved.

Tax deduction means nothing to me. Like 10:12 said, no sense to pay the bank $1 to save $0.30 from Uncle Sam.

I know people say it's better to invest but this is money that I cannot afford to lose. Not one cent. Thus paying off the mortgage seems like the best option.

+1

[Anonymous]

Anonymous wrote:

Anonymous wrote:What is your interest rate? If it is low, it probably makes much more sense to just invest the money. Plus, you will still get your tax deduction.

+1. There was a column in the Post real estate section over the weekend about this. OP, maybe you can find it -- it's a pretty good breakdown of the pros and cons.

Me again. Found it:

http://www.washingtonpost.com/realestate/tax-breaks-and-rates-factor-into-decision-to-pay-off-mortgage/2013/08/15/2ab0f92e-036f-11e3-88d6-d5795fab4637_story.html

[Anonymous]

OP here -- wow, thank you so much for the very helpful responses! Now when I do talk to our accountant I will have a much better idea of what to expect in terms of questions he will ask and things to consider.

[Anonymous]

Anonymous wrote:The tax advantage really isn't there when you have low interest rates and you are well into your mortgage and paying more principle than interest.

If you pay the AMT the tax advantage may not be there either.

[Anonymous]

Anonymous wrote:The tax advantage really isn't there when you have low interest rates and you are well into your mortgage and paying more principle than interest.

Agree this isn't really about the tax deduction. Smart advisers would recommend against being illiquid, however.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The tax advantage really isn't there when you have low interest rates and you are well into your mortgage and paying more principle than interest.

If you pay the AMT the tax advantage may not be there either.

AMT has nothing to do with the mortgage interest deduction. Not for a first mortgage, anyway.