Tax Tip of the Week
900 N. Kings Highway, Cherry Hill, New Jersey 08034
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Fax: 856.667.3652
For the week of
April 24, 2000
Excess mortgage interest is not deductible
When you request a second mortgage or a refinance of your
home, you may be able to get a loan that is in excess of the fair market value of the property. There are companies
who are advertising such loans. To get such a loan, the borrower needs an outstanding credit rating. In some cases,
your current credit rating must be better than the credit rating needed to obtain the original mortgage.
For those who have accumulated large credit card and other consumer debt, a real estate loan can be the answer
to a severe cash flow problem. Such a loan can convert high interest short-term (large monthly payments) debt into
a longer-term obligation that has much lower monthly payments and a somewhat lower interest rate.
There are certain limits on tax deductions for interest paid on "home acquisition debt" and "home
equity debt." For example, if debt on your home exceeds the fair market value of the property, you get no
tax deduction for interest you pay on the excess.
Aside from the tax considerations, if you have not committed yourself to a new set of spending habits, don't refinance
your home to pay off your credit cards. You will just be in that much more financial trouble when you abuse the
credit cards again.
Before you set out to refinance property, give
us a call. We may be able to save you time and money. We are here to help you with all your tax, business, and
financial matters.
Click here to view previous tax tips.
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and current tax information.
The information contained in this site is of a general nature and should not be acted upon in your specific situation
without further details and/or professional assistance.
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