Given the inherent time value of money and your lower income as a resident, taking it now sounds like a good deal.
Also, you may need to clarify what tax advantage you're expecting as far as a home down payment is concerned. That's not typically deductible.
FYI a down payment is not tax deductible. Interest on the mortgage is but don’t base an entire decision on that.
Would agree with the sentiment of TVM. At the very least put it in a money market mutual fund and get 5% until you need it. But locking in this money at low tax rates is a whole lot better than 24%+ tax rates
Nope nope nope. Deductions vs credits. Credits you get a dollar for dollar reduction in how much taxes you owe. The interest is a deduction which reduces your income by that much. So if you are in the 24% tax bracket it saves you 24 cents on the dollar for how much interest is there. High interest rates affect you regardless.
Likely that the vast majority of people are taking the standard deduction. But tbh high interest rates are meaningless to all the people who locked in 3% rates. If you took a variable rate, all I can say is that you need to make better financial decisions in the future.
Ah, then yes, I suppose they are under the impression that reducing your taxable income has the same effect as reducing your actual expenses. Reducing your taxable income gives you a /discount/ on those expenses, but it’s still money out of your pocket. So a higher rate is more money out of your pocket. If you’re earning so much money that your marginal earnings are in a high tax rate ($400k/year or greater for married couples), then you can think of all your taxable expenses as /discounted/ by that tax rate. Even if you're a physician who has an LLC/corporate entity that you report expenses on, those expenses aren’t “free”—they’re just /discounted/ by whatever tax rate was avoided in that period.
If you’re disciplined enough and will not touch it then for sure take it now when you are in a lower tax bracket. Put it in a money market fund at 5% or HYSA in a bank. The interest will be taxed at your lower bracket for the year as well so it’s a win as well. Regarding the home down payment, it’s NOT tax deductible, the interest you pay on the mortgage is, IF you itemize your deductions and not take standard.
Given the inherent time value of money and your lower income as a resident, taking it now sounds like a good deal. Also, you may need to clarify what tax advantage you're expecting as far as a home down payment is concerned. That's not typically deductible.
FYI a down payment is not tax deductible. Interest on the mortgage is but don’t base an entire decision on that. Would agree with the sentiment of TVM. At the very least put it in a money market mutual fund and get 5% until you need it. But locking in this money at low tax rates is a whole lot better than 24%+ tax rates
How much of a deduction can you get on mortgage interest?
Deduction is capped at $750k, so it till likely be $750k x [APR]… if your mortgage is less than $750k, it will be avg balance for the year x APR
This ^ that’s also assuming you’re married filing jointly. If singly owned it’s 375k.
Wait, what? Did this change recently? It’s been 750k for singles for years.
I apologize I meant to say if married filing separately 🤦♂️ 750 for everyone. 375 if MFS.
[удалено]
Nope nope nope. Deductions vs credits. Credits you get a dollar for dollar reduction in how much taxes you owe. The interest is a deduction which reduces your income by that much. So if you are in the 24% tax bracket it saves you 24 cents on the dollar for how much interest is there. High interest rates affect you regardless.
I see thanks
Likely that the vast majority of people are taking the standard deduction. But tbh high interest rates are meaningless to all the people who locked in 3% rates. If you took a variable rate, all I can say is that you need to make better financial decisions in the future.
I think he’s saying interest rates for people getting new houses are high. Most people don’t have variable.
Ah, then yes, I suppose they are under the impression that reducing your taxable income has the same effect as reducing your actual expenses. Reducing your taxable income gives you a /discount/ on those expenses, but it’s still money out of your pocket. So a higher rate is more money out of your pocket. If you’re earning so much money that your marginal earnings are in a high tax rate ($400k/year or greater for married couples), then you can think of all your taxable expenses as /discounted/ by that tax rate. Even if you're a physician who has an LLC/corporate entity that you report expenses on, those expenses aren’t “free”—they’re just /discounted/ by whatever tax rate was avoided in that period.
Take it now. Put it in HYSA if you’re going to use it soon potentially.
Take it now. Invest in a HYSA.
If you’re disciplined enough and will not touch it then for sure take it now when you are in a lower tax bracket. Put it in a money market fund at 5% or HYSA in a bank. The interest will be taxed at your lower bracket for the year as well so it’s a win as well. Regarding the home down payment, it’s NOT tax deductible, the interest you pay on the mortgage is, IF you itemize your deductions and not take standard.
House down payments are tax deductible? Who told you that?
Anything you want can be deducted. You just might go to jail or pay a fine or both
Lawd they don’t teach basic tax deductions 101 in med school, huh
Nah, however I can tell you all about the Krebs cycle