bluntmoney.com

A reason often given for not paying off your mortgage or student loans is that you get a tax break by having them. However, just having a mortgage or a student loan and paying thousands of dolllars in interest on them doesn’t guarantee you a tax break. Whether or not you get a deduction for them depends on several factors.

For example, here are some figures based on our tax return:

Mortgage interest paid: $6291
Amount deductible: $0, because we were better off taking the standard deduction.

Student loan interest paid: $421
Amount deductible: $249

In other words, we paid $6712 in interest for a total savings of $249. Not my idea of a bargain. Of course, if we’d had a huge mortgage and paid enough in interest that combined with other deductible items it put us over the amount for the standard deduction, it might have been a different story. I still don’t like the idea of paying lots of money to pay slightly less elsewhere, but it would pay to run the numbers for your particular situation. It’s just a myth that buying a house or carrying a student loan will always save you money on your taxes.

• Get Paid For Survey? Sure, But Can You Make Real Money At It? It is easy to get paid for surveys. There are thousands of new surveys being made every week. There is always demand for new survey...
• Consider this Likely Future Tax Benefit of Early Mortgage Payoff Mr. ToughMoneyLove has participated in many online debates among readers of personal finance blogs and retirement planning message boards.  A frequent topic of debate is the wisdom...
• Is Converting a Traditional IRA to a Roth a Brilliant or Stupid Idea Right Now? If you are over 70 ½ you might consider converting your Traditional IRA to a ROTH IRA right now. If so, you've got plenty of...