Mortgage Payment Tax Deductible?!?
Ok - here is my question and just realize that I know the interest of mortgages is tax deductible.
Why isn't the whole mortgage payment tax deductible? As I see it - it is a cost of doing business, right? Can this be a legitimate argument?
If I was in the sports equipment industry and I purchase 100 pieces of sporting goods, this purchase is tax deductible along with anything else I need to buy to carry on business, right? Even if I charge it and pay it off in installments - The tax deductibility isn't just for the interest, right???
I'm in the real estate rental business and I need to purchase buildings for my business, why shouldn't the whole cost of my purchase be tax deductible?!?
Any comments?!? Explainations?!?
Thank you!
[addsig]
the pricipal would obviously not be deductible. As for your sporting goods analysis, those items may be fully depreciable in the first year, which is about the same as fully deductible, but also different.
However to "deduct" the principal portion of your payment, you could structure the investment as a NNN lease from your company to yourself ; this way all of the expenses of the property would be tax deductible for the business.
I see your point, but you do get to deduct the whole amount.
You deduct the cost of your building (not land) over time through depreciation expense.
Simple example:
Purchase price = $100,000, less $20,000 for land
30-yr loan, 6%, total interest = $115,838
Total payments = $216,000
Total deductions (depreciation and interest) = $195,838, which equals approx $20,000 (portion for land) less than the total loan payments[ Edited by rentalman on Date 08/03/2004 ]
Ok - This is making more sense!
Thank you guys for the clarification!
[addsig]
No problem...