Buy It With Cash, Mortgage It Later

Is the market still this hot that a buyer need to use this strategy to out bid other buyers? 

I've hard of this happening in the last few years but retake out a mortgage on a paid off home might end up with slightly higher rate loan since the new mortgage is consider a home equity loan /home equity line of credits by some lenders. 


 
nyc to oc said:
I wonder if you can still claim a mortgage interest deduction on your taxes if you do this?
Of course you can.  All interest up to $1m is tax deductible for primary residences and there's no limit on investment properties.  I had a client do exactly this last year and I did the same thing when I bought my client's condo.
 
Do you mean there's no limit in how many investment properties you can deduct for, or no limit in the amount of mortgage interest deducted for investment properties (above $1.1M) ?

USCTrojanCPA said:
nyc to oc said:
I wonder if you can still claim a mortgage interest deduction on your taxes if you do this?
Of course you can.  All interest up to $1m is tax deductible for primary residences and there's no limit on investment properties.  I had a client do exactly this last year and I did the same thing when I bought my client's condo.
 
NewToNewport said:
Do you mean there's no limit in how many investment properties you can deduct for, or no limit in the amount of mortgage interest deducted for investment properties (above $1.1M) ?

USCTrojanCPA said:
nyc to oc said:
I wonder if you can still claim a mortgage interest deduction on your taxes if you do this?
Of course you can.  All interest up to $1m is tax deductible for primary residences and there's no limit on investment properties.  I had a client do exactly this last year and I did the same thing when I bought my client's condo.

I meant that there's no loan limit for interest deductibility for investment properties (aka all interest is deductible no matter what the loan amount is).
 
In other words, if you and a sibling bought two identical houses next to each other, and each rented your house to the other, you'd both enjoy the exact same house; but you'd be able to deduct all interest, expenses, and depreciate the properties.
 
Late 2011 my sister bought an older home in Costa Mesa, rented it out to her son who collected rent from several room mates friends which paid for his entire rent to my sister and then some. My sister depreciates the property and my nephew has been slowly been fixing it up (put in hardwood floors, barn doors, etc by himself) and doing any repairs needed and pays for the gardener.

My sister has no problems finding someone who will keep up the property and my nephew knows he will eventually inherit the place and she is only out her down payment.

My nephew works for my brother in law in his transmission shop, so no issues with worrying about a renter who loses his job. My nephew learns the trade and will eventually take over my brother in laws shop.

All in the family. lol!
 
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