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Mortgage interest is tax deductible, which can be quite substantial if you're trying to lower your tax burden. The good news is that AMT comes along and typica

Mortgage interest is tax deductible, which can be quite substantial if you're trying to lower your tax burden. The good news is that AMT comes along and typically eats up deducting property taxes and other things, but the mortgage interest itself still works.

jpmattia 10y ago
There's also a deduction phase-out at high incomes. (450K iirc)
- JumpCrisscross 10y ago
  $1MM if single, $500k if married and filing separately. EDIT: see comment below. One can deduct the interest on mortgages up to $1MM and $500k, but there is a cap on itemised deductions (mortgage interest deductions are this kind of deduction) around $450k. http://www.bankrate.com/calculators/mortgages/loan-tax-deduction-calculator.aspx http://www.bankrate.com/calculators/mortgages/loan-tax-deduc...
  - jpmattia 10y ago
    There are two different things: From your link: Taxpayers can deduct the interest paid on first and second mortgages up to $1,000,000 in mortgage debt (the limit is $500,000 if married and filing separately). So mortgage interest for loans beyond $1M are not deductible at all. Then there is the deduction phase-out > You are subject to the limit on certain itemized deductions if your adjusted gross income (AGI) is more than $309,900 if married filing jointly or qualifying widow(er), $284,050 if head of household, $258,250 if single, or $154,950 if married filing separately. Your AGI is the amount on Form 1040, line 38. https://www.irs.gov/publications/p17/ch29.html https://www.irs.gov/publications/p17/ch29.html
- jonknee 10y ago
  Though somewhat ironically, Zuck probably isn't high income because his Facebook salary is $1 and the vast majority of his wealth is in FB shares that pay no dividend.
  - jpmattia 10y ago
    Low income reduces the value of the deduction. I'm sure there are a gaggle of cpa's optimizing his 1040.
maxxxxx 10y ago
There should be a cutoff for deductibility at some price. Let's say 300k or whatever. This would do make miracles for housing affordability.
- wavefunction 10y ago
  I think a more effective change would be to remove the mortgage interest deduction for second houses.
- matt_wulfeck 10y ago
  With more laws comes more accounts and more loopholes. We need to overhaul the tax system, not pile more crap on top of it. Besides, the vast majority of people taking advantage of this deduction is the normal American. Not a business owner or speculator. You'd be ending the largest tax relief the middle class has.
  - maxxxxx 10y ago
    That's why I proposed a cutoff at some rate. The middle class should be subsidized not some millionaires who have ten homes.
eitally 10y ago
More likely that he was borrowing a great deal and preferred not to be forced into an unplanned stock sale. As the article hints, the odds are good it was a short term loan, which could be one reason for the unnatural rate.

jpmattia 10y ago

There's also a deduction phase-out at high incomes. (450K iirc)

JumpCrisscross 10y ago
$1MM if single, $500k if married and filing separately. EDIT: see comment below. One can deduct the interest on mortgages up to $1MM and $500k, but there is a cap on itemised deductions (mortgage interest deductions are this kind of deduction) around $450k. http://www.bankrate.com/calculators/mortgages/loan-tax-deduction-calculator.aspx http://www.bankrate.com/calculators/mortgages/loan-tax-deduc...
- jpmattia 10y ago
  There are two different things: From your link: Taxpayers can deduct the interest paid on first and second mortgages up to $1,000,000 in mortgage debt (the limit is $500,000 if married and filing separately). So mortgage interest for loans beyond $1M are not deductible at all. Then there is the deduction phase-out > You are subject to the limit on certain itemized deductions if your adjusted gross income (AGI) is more than $309,900 if married filing jointly or qualifying widow(er), $284,050 if head of household, $258,250 if single, or $154,950 if married filing separately. Your AGI is the amount on Form 1040, line 38. https://www.irs.gov/publications/p17/ch29.html https://www.irs.gov/publications/p17/ch29.html
jonknee 10y ago
Though somewhat ironically, Zuck probably isn't high income because his Facebook salary is $1 and the vast majority of his wealth is in FB shares that pay no dividend.
- jpmattia 10y ago
  Low income reduces the value of the deduction. I'm sure there are a gaggle of cpa's optimizing his 1040.

maxxxxx 10y ago

There should be a cutoff for deductibility at some price. Let's say 300k or whatever. This would do make miracles for housing affordability.

wavefunction 10y ago
I think a more effective change would be to remove the mortgage interest deduction for second houses.
matt_wulfeck 10y ago
With more laws comes more accounts and more loopholes. We need to overhaul the tax system, not pile more crap on top of it. Besides, the vast majority of people taking advantage of this deduction is the normal American. Not a business owner or speculator. You'd be ending the largest tax relief the middle class has.
- maxxxxx 10y ago
  That's why I proposed a cutoff at some rate. The middle class should be subsidized not some millionaires who have ten homes.

eitally 10y ago

More likely that he was borrowing a great deal and preferred not to be forced into an unplanned stock sale. As the article hints, the odds are good it was a short term loan, which could be one reason for the unnatural rate.