Tax Deductions on Mortgage Interest Payments Explained

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WHO AM I?
Hello 👋 I’m Humphrey, I used to be a financial advisor, worked in gaming/tech, and started my own eCommerce business. I make practical, rational content on investing, personal finance, the news, and much more with a data-backed approach. My goal is to help you with financial literacy and creating wealth.

PS: I am no longer a current Financial Advisor, any investment commentary are my opinions only. Some of the links in this description are affiliate links that I do receive a commission for & they help support the channel!

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[Martin-rbnp]

Getting taxed at 75k but paying 120k in interest a year seems like a poor tradeoff

[drdozer]

Thanks humphrey I'm definitely gonna think of this next time I buy a 3 million dollar house.

[isaacl]

Also isn’t the interest deduction capped at a mortgage value of $750, 000 so in the example that person would be way over the cap

[HaviccB]

Paying 25k to the bank instead of getting taxed on that 25k at 30%.. Am I missing something?

[nathanh]

Let’s pay a bunch of interest so we can get 30% of it back as a tax deduction. If you don’t need the loan, that’s stupid.

[masonpark]

That deduction is limited to homes valued under 750, 000 is something you need to keep in mind 3, 000, 000 dollar home is not the best example if you do not include that limitation.

[youtubewatcher]

Buying a $3 million home on a 100k income; that’s believable.

[stocksxbondage]

With love & respect, Humphrey, this example needs tweaking!

[reality]

Pay the IRS - or pay the bank. Either way, that money is gone.

Actually... you're losing money by paying the interest. You only save (at the most) 37% of the interest on your tax bill.

[JACOBMOULTy]

Ok, I must be missing something. You'll pay 25k in interest to avoid paying 10k in taxes? Is that not a net loss of 15k?

[estebanrivera]

Who makes $100k and can afford to save $600k for a down payment and still pay $16k+ a month on their mortgage?

[xiphoid]

Makes $100k/year, buys a $3 million house. 😂 Yet, in Asia, the median home does cost 30x annual income. That should cheer you Americans up.

[marklechadores]

I'd rather purchase a small house than a large multimillion dollar home for a Status symbol. But then again, renting is a better option for myself

[jaymoar]

Please keep making shorts! These videos are the best!

[kenroper]

How did you buy a 3 million home on 100k salary? Make a video on that

[goingforspeed]

If you make a 100k a year you're not going to have more than $3M in the bank.

[jonathankostmayer]

You also pay taxes on homes, and those taxes are also deductible as itemized deductions, along with other types of taxes, charitable contributions, and other things. You don’t have to pick one or the other and they all add up together (with their own limitations). These things are what people are paying for anyway throughout the year and not taking itemized deductions if you can beat the standard is just increasing the taxes you pay needlessly.🤦‍♂️

[DanielDuhon]

Getting on debt to pay less taxes is stupid because at the end you’re still going to pay more. Better to pay it off and have no debt.

[bradw]

So you want to pay the bank $25, 000 in interest to save about $7, 000 in taxes? Most of your advice is pretty good but how do you not see the flaw in this one? It’s a major blind spot to most people… screw the tax deduction. Pay the tax and you have more money in your pocket at the end of the day than if you give the $25k to the bank to save $7k.

If you want a deduction that bad, I’ll bill you from my CPA firm $25, 000 to give you a write off. (I’ll pay the tax on the $25k and pocket the rest).

[DaddyisPissed]

This interest would be limited due to the cap in mortgages. Not sound advice