Quick Tax Thinking

Physician's Money DigestAugust31 2004
Volume 11
Issue 16

A financial move that seems like agood idea may lose some of its lusterwhen you look at the tax consequences.If you pay off your mortgage biweeklyinstead of monthly, for example, youshorten the length of the mortgage andthe total interest you pay out. On a 30-year mortgage, biweekly payments willcut the loan period to just over 25years. When you calculate your savings,though, be aware that mortgage interestis usually deductible. Assuming you'rein the 25% tax bracket for the entirelife of the mortgage and you save a totalof $40,000 in interest by making biweeklypayments, you give up $10,000that you would have saved on your taxbill if you had deducted that interest.Note: If your adjusted gross incomeis more than $142,700, itemized deductionsstart to phase out, so your net savingswill be higher.

Related Videos
© 2024 MJH Life Sciences

All rights reserved.