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Old 02-12-2011, 08:09 PM
 
Location: Summerville
7,934 posts, read 14,734,231 times
Reputation: 1347

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Ok, I was listening to the tail end of a radio show today at 1pm on 94.3, this was a local guy, the guy claimed to be a Realtor and was saying that you may want a higher interest rate so that you get a larger tax right off....

Does this sound like a good idea to anyone out there?

The way I figure it he wanted me to pay some bank $1000.00 to keep from sending Uncle Sam $300.00, if my BASIC math is correct I am still $700.00 lighter in my wallet ($1000.00 - $300.00 = $700.00)......

Why would anyone consider financing something at all let alone at a higher interest rate JUST for a Tax right-off?

Now all Yall Realtors out there don't get offended, this guy was spouting this off like it was sound financial advise.......
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Old 02-12-2011, 08:24 PM
 
Location: Charleston, SC
2,517 posts, read 7,050,025 times
Reputation: 521
No, Tom, you're correct. That guy was an idiot.

Granted, interest rates are going up, and going up fast with the government picking any one of the options in play to phase out Fannie Me and Freddie Mac. I'm not exactly sure how this is all going to play out, but the smart money says to buy, and buy now, before rates, necessary down payments and credit requirements go up. I think we're looking at weeks, not months at this point, but that's just my opinion after a cursory look at the options the government is throwing around.

Edit:

And in defense of Realtors, they come in all shapes and sizes. You -do- only have to be 18 and able to understand basic english to pass the licensing exam. That being said, there are many, many fantastic, intelligent, well-educated, professional realtors across the nation who really do know what they're doing, and who can serve wonderfully as trusted advisers, and skillful negotiators. Their advice should be sought after in times like these. Do your research on anyone you hire as a professional representative though. The purchase of a home, or investment property/properties, is an important decision. If you're retaining a professional to assist you in that regard, make sure they actually know what they're talking about.

Last edited by DJShymansky; 02-12-2011 at 08:35 PM..
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Old 02-13-2011, 08:40 AM
 
Location: Summerville
7,934 posts, read 14,734,231 times
Reputation: 1347
This guy wasn't some 18 year old with a high school ed, he is a rather successful realtor in the local market with his own radio show.....
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Old 02-13-2011, 09:14 AM
 
182 posts, read 424,422 times
Reputation: 130
Quote:
Originally Posted by OleTomCat View Post
This guy wasn't some 18 year old with a high school ed, he is a rather successful realtor in the local market with his own radio show.....
I wonder if it was the same "untold genius" who sold me this awesome condo-conversion in 2005 because "you can't rent them anymore". Since that fateful day, it has dropped over $95K in market value (still falling) and is embroiled in a ridiculous lawsuit that makes it virtually worthless as far as re-selling it goes...lesson I learned the hard way? Do your own homework... ... ignore the blah, blah, blah and use your common sense. Why would we ever trade $1000 for $300 back in a tax refund? hmmmm....
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Old 02-13-2011, 03:13 PM
 
435 posts, read 717,550 times
Reputation: 75
Generally speaking, no, lower interest rate is always better. Although, people who can take advantage or need large write off usually have enough cash to play around with how much mortgage they need to carry to achieve maximum write off. Context is also very important. If it is an investment property, the tax law is different, too.

Btw, just because someone is on radio (nevertheless highly entertaining 94.3 cough cough) is successful; I bet he actually paid for his airtime. Is there a place we can look up who are the top 20 Realtors by sell volume online in Charleston somewhere?
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Old 02-13-2011, 03:59 PM
 
Location: Summerville, SC
660 posts, read 1,168,482 times
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Out of 4500 actively licensed realtors in the Charleston market, only 386 had 12 or more transactions last year.
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Old 02-13-2011, 04:17 PM
 
Location: Summerville
7,934 posts, read 14,734,231 times
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I don't care what context you put it in how is it better to give a bank $1000.00 to keep from sending Uncle Sam $300.00, and there is no way in hell that the law for investment property is going to let your right off more than the $1000.00 dollars so at best you end up giving more money to the bank and having less in your pocket or investment, borrowing money to invest is just plain stupid....
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Old 02-13-2011, 07:47 PM
 
435 posts, read 717,550 times
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Tom, you will be surprised. Do you know mortgage ARMS were initially created for the rich solely for cash flow and tax purposes. Also, mortgage is the only loan you can deduct the interest (hint: people who are doing this have money to pay off the loan if they want to). So they are not really borrowing money to invest. In addition, it is all about your tax bracket, lowering your tax bracket from 35% to less than 15% is a lot of saving. Trust me the top 1% of US families 10 year ago have net wealth average of 10 million dollars excluding their primary resident. Today, the average is 14 million dollars due to tax cuts! The beauty is that the highest earner (3 oops 5 billion dollars; I think that's the highest income but I could be wrong) last year in the US only paid flat 15% for his earning because it is all capital gain.

You are not wrong though, generally speaking LOWER INTEREST RATE IS STILL BETTER.
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Old 02-14-2011, 06:57 AM
 
Location: Summerville
7,934 posts, read 14,734,231 times
Reputation: 1347
Quote:
Originally Posted by JimmyCh View Post
Tom, you will be surprised. Do you know mortgage ARMS were initially created for the rich solely for cash flow and tax purposes. Also, mortgage is the only loan you can deduct the interest (hint: people who are doing this have money to pay off the loan if they want to). So they are not really borrowing money to invest. In addition, it is all about your tax bracket, lowering your tax bracket from 35% to less than 15% is a lot of saving. Trust me the top 1% of US families 10 year ago have net wealth average of 10 million dollars excluding their primary resident. Today, the average is 14 million dollars due to tax cuts! The beauty is that the highest earner (3 oops 5 billion dollars; I think that's the highest income but I could be wrong) last year in the US only paid flat 15% for his earning because it is all capital gain.

You are not wrong though, generally speaking LOWER INTEREST RATE IS STILL BETTER.
Capital Gains are not income as defined by the IRS.......

These people are stupid, the interest is deductable but so are a number of other things like charitable giving which nurishes the soul as well as saves taxes and you don't make a banker richer.........

Generally speaking? I would think that lower interest rates would always be better, you wouldn't happen to have a radio show on Saturdays on 94.3 would you?
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Old 02-14-2011, 08:28 AM
 
435 posts, read 717,550 times
Reputation: 75
Quote:
Originally Posted by OleTomCat View Post
Capital Gains are not income as defined by the IRS.......

These people are stupid, the interest is deductable but so are a number of other things like charitable giving which nurishes the soul as well as saves taxes and you don't make a banker richer.........

Generally speaking? I would think that lower interest rates would always be better, you wouldn't happen to have a radio show on Saturdays on 94.3 would you?
I said the only LOAN. Rich people do charitable giving, too, usually associated with a foundation in their NAMES. For example, Howard Huge Medical Institute was originally set up as a gigantic tax shelter. There is also a reason a single building in Cayman island has 15,000 US corporations registered there, and some families actually incorporate themselves for earning over 250k even though the money is through a paid position. There is a reason the top 1% of US families has effective tax rate of less than 15%. Yea, capital gain is not income and we should tax it at maximum (instead of some random 15% mark), since it's not earned through labor but it is as real as actual income (did holy scripture forbids using money to make money?).

No, I am not a Realtor, and sometimes listen to 94.3 for the giggles. There is a reason these kind of shows are on this kind of station in every cities. I thought you don't listen to conservative talk shows Tom.
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