Episode 078:

Home Equity Fails Tax Treatment Test

In this final episode of the four episodes where I show that home equity fails all of the tests of a wise and good investment. Besides failing the Liquidity Test, the Safety Test, and the Rate of Return Test; home equity also hurts you on your taxes, causing you to pay more than you should. So it fails the Tax Treatment Test. Listen in to the final episode and then in future episodes I’ll show you where my clients have been safely storing their home equity for over eleven years now.

Included in this episode:

We’ve covered Liquidity, Safety, and Rate of Return. The final episode in this four-part series is about the Tax Treatment

Four Tests of a Wise Investment

“How does it perform as an investment?”

Test 4: Tax Treatment = Doesn’t help on your taxes and forces you to pay more

  • Tax Advantages
    • No advantages of having half your home paid off in home equity
  • Tax deductions allow you to lower your income before your taxes are calculated
  • Mistakes people often make
    • Using investments or equity from the sale of the home, paying cash for the home (bad mistake)
    • Using extra monthly payments to speed up how quickly the mortgage interest deduction goes away
    • Retirees with money in IRA’s and social security income coming in, paying extremely high taxes due to not having the mortgage interest deduction
    • Real estate investors – having 15 or more rental properties

1 Income with no expenses is not as good as 2 incomes 1 expense

Important links:


Charlie, your host:

CharlieMedium“Charlie Jewett is an Author, Speaker, Podcast Host, Consumer Advocate, and Investment Advisor from San Diego, Ca.  Charlie has spent the last eleven years trying to change the way the industry professionals and consumers think about Retirement.  Charlie provides education materials that help people to create their own financial plans and offers services to protect consumers from the bad guys in the Financial Services Industry.”  


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