On Wednesday, April 22, 2015 at 8:44:44 AM UTC-4, Ed Pawlowski wrote:
On 4/21/2015 11:23 PM, krw wrote:


Sure, sometimes you just can't lose. ...until you do.
In the USA you have the added benefit that your mortgage interest is
tax deductible (on your primary residence? or any?)

Any residence, with some restrictions at the very top end. The
mortgage interest deduction applies to vacation homes, including boats
and RVs, as well. Of course interest on rental property is deductible
as a business expense, as well.


Interest on a car loan is NOT deductible, but it is on a home equity
loan.

It's never safe to simple say "it is on a home equity loan".

Even on a home equity loan/line of credit, there are some tax deductibility limitations related to the date of the loan, the amount of the debt, the FMV of the home, etc.

It's all explained he

http://www.irs.gov/publications/p936...link1000230008

Some people take the home equity loan and then use the money to
buy a car. Not legal, but done every day.


There is nothing illegal about buying a car (or anything else) with Home Equity debt or even with Home Acquisition debt and you can still deduct the interest (within all applicable limitations, of course)

Here's a fun one: You can pay cash for a home, then take out a *first* mortgage, spend all of the money on a fabulous vacation and then deduct the interest as if you bought the house with the proceeds from the loan. It all depends on the timing between the purchase and the closing on the mortgage.

I know a couple that withdrew a huge sum from the wife's IRA and bought a house with it. She paid no income tax on the withdrawal. They then withdrew the same amount of money from the husband's IRA and deposited it into the wife's IRA. He paid no income tax on the withdrawal. They then took out a mortgage on the house they bought and deposited the loan proceeds into his IRA. Now they take the tax deduction on the mortgage interest every year. Once again, it's all in the timing of the transactions.