Quote:
Originally Posted by DAVES
An endless debate. You should ask your accountant. For example is the interest deductible to you. Do you have the money to pay it off? What are you getting on the money you would use to pay off the bond. Re: 3-5%. The interest rate is not negotiable. Ours was 5%, we take a standard deduction so it is not deductible interest. We/I decided to pay it off, this year. We were told somewhere in the deal we signed the interest would be renegotiated in two years.
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The only way the bond interest is deductible is if it is rental property. If it is your primary residence, the bond interest is not tax deductible because the amount of the bond is not based in the value of the property. The bond interest is also referred to as a "non-ad valorem" expense. Ad valorem expenses are tax deductible, but non-ad valorem expenses are not. Your tax bill identifies these expenses as such.