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Updated almost 9 years ago on . Most recent reply

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Earl Howard
  • Investor
  • Medford, MA
1
Votes |
7
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Paying off which mortgage first?

Earl Howard
  • Investor
  • Medford, MA
Posted

I'm seeing that is pays to actually pay off a mortgage of course. but My question comes from a tax stand point:

If you can pay off a mortgage which one should you pay off first?

Rental that has income coming in? or Your primary residence?

I'm interested in the choice.  I've been doing taxes for ever, and thought that if you paid off your rental mortgage your taxes would be increased due to all of the rental income being profit (except for the operating expenses). 

If you paid off your primary residence you would expose yourself to the same thing , no mortgage interest, But it would Not be profit. This would escalate you to paying more in taxes.

Of course one would have more cash to buy another rental if your Primary mortgage is paid off and that would be moving from on mortgage to another one. in a sense giving you the ability to have another mortgage with more property.

So I'm thinking if you get rid of your Primary mortgage you should get another rental right away, Any thought?

Most Popular Reply

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2,317
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Gino Barbaro
  • Rental Property Investor
  • St Augustine, FL
1,908
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2,317
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Gino Barbaro
  • Rental Property Investor
  • St Augustine, FL
Replied

@earl hoyoward

Hi Earl

I was taught that your personal life should have as little debt as possible and that your businesses should carry the debt because you will be generating revenue to pay the debt.  Rental real estate is a perfect example.  The tenants are paying your debt while the property is appreciating and the principle is being reduced.  

I think it is all about mindset.  I would like to have a clean debt sheet on my personal balance sheet.

Gino

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