Subj : Income Tax Differences
To   : ROB MCCART
From : Mike Powell
Date : Wed Feb 26 2025 09:57:00

> MP>We can write off interest *but* it is only really a benefit early on in you
>   >mortgage, when the interest payments are higher.  In KY you can do that on
>   >your state taxes, too.  It has not been of any benefit to me for several
>   >years now as my mortgage is 10+ yrs old.

> But if your mortgage is over 25 or 30 years there still must be a
> fair amount going to interest. In any case, just to toss out some
> random figures, if you have a $250,000 mortgage at 6% over 25 years
> you would over that time pay $229,855 in interest that you wrote off
> at some point.

Yes, there is, but it is not enough to write off.  You *can* write it off,
but it is not to your benefit.  We have something called a "standard
deduction" that AFAIK everyone can take on their individual income tax.
The home mortage interest is only of value so long as (added up with a
few other things, like charitable contributions, personal property tax,
etc.) it is *greater than* the standard deduction.

So once that interest goes down enough, it is no longer of benefit.  The
state standard deduction is lower than the federal, so it was of benefit
for a little longer there, but the state also doesn't allow you to add as
many things in that deduction equation (they no longer include personal
property tax, as an example) so it eventually is also no longer of benefit.

> RM>> Here our advantage is your *Principal* residence can be sold at a
>   >> huge profit without any Capital Gains tax involved.

> MP>That *is* nice. ;)

> Do you pay tax on the amount your house goes up in value if you
> sell it?

You do if you pocket it, I think.  If you are buying another home I cannot
remember.  It has been long enough that I don't recall paying capital
gains, and the house I bought cost more than what I sold the previous one
for, but I might have.

> A question off topic, which is funny considering the question..
> Lots of conversations going on in the conference which is called
> FI-Consprc. I assume FI is Fido? What is this area supposed to be
> used to discuss?

> If Consprc is short for Conspiracy then maybe some of this might
> still be on topic..   B)

LOL you are right on both counts.  It should be for Conspiracy topics,
which could include politics, but I do think we've got off topic on this
thread.  Since we are discussing tax differences between the US and
Canada, I will move this response over to the Canada Chat echo as I know we
both read and post there.  ;)

Mike

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