Monthly Archives: August 2015

HOME REFINANCING – Understanding the Tax Issues

Are you thinking of refinancing your home mortgage? The following are tax rules to keep in mind.

Refinanced home acquisition debt - Any secured debt you use to refinance home acquisition debt will only qualify as home acquisition debt up to the amount of the balance of the old mortgage principal just before the refinancing. Any additional debt not used to build, or substantially improve (add value, or prolong the useful life) of the home is not home acquisition debt, but it may qualify as home equity debt.

Track "points" - A point is a fee equal to 1% of the loan amount. While you can fully deduct the points you pay when buying your home (if $1 million or less), points paid on refinancing are generally amortized over the term of the new mortgage. The points related to the home improvement are deductible. If you refinance a loan for a second time, the undeducted points from the previous loan are deductible that year, which is also the case when you sell your home.

You can only deduct points on loans secured by your second home over the life of the loan.

 Trace your use of funds - When you "cash out", or convert $100,000 or less of your home equity to cash during a refinance, the interest is tax deductible. If you take additional amounts, the interest may or may not be deductible depending on how the funds are used. When you use funds to expand your business, the interest may be deductible business interest. If you buy investments, the interest may be investment interest expense.


For more information on refinancing or mortgage interest tax deductions, give us a call.

Twelve Ways to Always Be Financially Poor

Many Americans end up broke month after month.

  • One third of households earning $75,000 or more a year — live paycheck to paycheck.
  • The average indebted household credit card debt is $15,863.
  • 73 percent of Americans have less than $1,000 in their savings account.

Even with income above the poverty line, overspending leaves many financially poor.

Here are twelve ways to always be broke, with a typical response:

1. Put Today's Happiness before Future Financial Needs

Just be happy today, there is always Social Security.

2. Not Making Savings a Priority

I’ll get around to saving soon.

3. Not Knowing Where Your Money Is Going

Where does my money go? “I haven’t a clue.”

4. Not Separating Wants from Needs

If I want it, I must need it.

5. Investing In Stuff- Instead of Yourself

Invest in myself, what do you mean?

6. Trying to Get Rich Quick

Just give me a way to get rich, and Quick!

7. Not Sticking to a Budget

I tried a budget once, it didn’t work.

8. Buying Depreciating Assets

But, cars, boats, and the latest electronics are much more fun.

9. Being Unwilling to Sacrifice

The future, it’s a long way off.

10. Trying to Have It All

I work hard, I deserve it and now.

11. Spending More Money Than You Make

Oh, I’ll just charge it to my credit card.

12. Avoid Earning More

If I earn more, taxes will take it all.
(This is simply untrue. Taxes take a percentage, let’s say 25%. Wouldn’t it be better to have 75% of a dollar instead of none of it?)


Questions to ask yourself before spending, to help avoid being financially poor

  • Why do I want it?
  • Is it actually needed today?
  • Can I honestly afford it?
  • If I spend now, what happens to me later?