Benefits of big mortgages and property taxes

[psych007]

Yesterday, my attending told me he pays a total of 26K property and village taxes per year(this is in long island btw), not including mortgage (48K/year).  While not ideal, what are the benefits of a huge mortgage and property taxes?

[LBKCLU]

You can take an income tax deduction for the interest on a mortgage up to $1,000,000. You can do the same for a Home Equity Line of Credit (HELOC) for up to $100,000. Beyond that, the interest is not income tax-deductible.

Property and Village taxes are also income tax-deductible.

You have to be able to afford it and be comfortable spending that type of money if that is the type of home you want. Yes, Long Island is an expensive place to live!

[asmallchild]

That's not as bad as I thought for long Island. Anecdotally I have friends paying just as much if not more for both in new jersey

[PhysicianOnFIRE]

It also depends on income.  With a physician's income, there is a high likelihood that you will be paying the AMT (alternative minimum tax) which doesn't allow for many of the deductions that the regular tax code allows for (property tax, state income tax among them).  It gets complicated.  I believe the mortgage interest deduction remains intact.

[jfoxcpacfp]

Tax write-off, but I don't see this as a benefit, rather a way to make the cost of expensive property more bearable. Too many people let the tax tail wag the long term growth of wealth dog.

[psych007]

I had an attending tell me that although property taxes in long island are expensive, it's actually advantageous for many reasons and really not that high--at least when compared to living in NYC (low property taxes).  Unlike NYC, there isn't the extra 3-4% tax (forgot for what); you can write off the property taxes, and you can send your kids to public schools, which are much better than nyc public schools.  When you account for these factors, paying 16K a year for property taxes isn't all that bad.  thoughts?

[jfoxcpacfp]

Really, it just depends upon your perspective - and, most particularly, on your short- and long-term goals. Quite honestly, I would jump at the chance to own a place to live in NYC part of the year, but it wouldn't be for the tax breaks!

[Hatton]

Whenever I hear people discussing the property taxes that they pay in NY or NJ I am astounded.  I live in the non-coastal south.  I pay $1600/year on my house, $400/Year on a 20 acre farm with a pre-Civil  War house, and $1100/ year on a 5 acre lake property.  It is hard for me to believe that the road to financial independence is achievable  with 26k in property taxes especially if this attending is young.  26k is MMM entire yearly spending for 3 people.  Unlike a mortgage property taxes continue forever.  In my state they even get reduced at 65.  WCI has said before docs who live on either coast make less money and pay more to live.

[Zaphod]

Property tax in Cali is actually not bad, you'd need a 3 million dollar home to get 26k/year. Sure, it can be more spendy here, but sometimes you get what you pay for, and depending on what you do it may be a stronger market. There are also strategic places one can live to be simultaneously where they want and have decent cost of living, it doesnt have to be in SF. There may be a state tax but I'll gladly pay that to live here.