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How many home purchasers buy a $400-500,000 house when a $150,000 house would do: Just to get the home mortgage deduction.

How many others wastefully borrow against the equity in their home because some boarder-line loan shark (no offense intended against mortgage lenders) tells them that they can run up the balance on their HELOC (Home equity Line of Credit), us it to pay-off their Credit Cards, and save money on their taxes all at the same time!

Oh, and don't forget those up-front mortgage fees in the form of points paid to get a "lower mortgage rate"...those are tax deductable too! So you can get all kinds of tax deductions and really "stick it to the taxman!"

Well not so fast...If you really are honest about it your mortgage interest deduction encourages the following horrific financial behaviors:

1. Buy don't rent (renters get no deductions so they are losers right?)
2. Urban Sprawl (Houses use more space than apartment complexes)
3. Buy bigger, not smaller (Std Deduction phases in if your mortgage falls to below $60-$70000 if you are married filing jointly. So to get a deduction at all, you must buy big, and bigger is better right?)
4. Keep your debt level high. (Don't need a big mortgage? Think HELOC so you don't fall below the Std. Deduction)
5. Loan Sharking - (clever mortgage salesmen love you and have YOUR financial interest at heart...Yeah right...Ditto real Estate Agents, home builders, Real Estate attorneys, tax accountants, etc...They are all just looking out for you!!! Believe me, they LOVE You and your home buying ways!)
6. Gambling ( Listen to that salesman: I bet rates have bottomed! Time to refinace that debt before they go up and you miss your 1 and only chance. See also #5)
7. More Gambling (Have a gambling problem! Let your HELOC pay for it!)
8. Increased consumer leverage (closely related to #7 - Spend, Spend, Spend like there is no tommorow. Your house is your piggy bank! And you've got years to pay the money back!)
9. The foolish belief that owning your own home is your best investment and way to secure retirement (Every $1.00 that you spend on principle AND interest for your home is a $1.00 that you could have invested elsewhere...Also, your higher debt-equity may disqualify you for financing other business opportunities as they come along).
10. Finance retirement with your home (where you gonna live if you sell the house to pay for retirement. What happens if the home declines in value between now and then?)

I could go on and on and on...Admittedly, I myself own my own home. Its a choice that I've made. And right now it does make sense from a tax standpoint (Although not for me, because my loan balance is below the Std. Deduction thresh hold); but, owning a home vs. renting should be a true choice, and not a tax decision.

Letting taxes rule your financial and life decisions is really letting the tail wag the dog.

Ah but then I'm just an evil Accounting in cognito! What do I know.

Report Filed by Scott Evil, CPA
(c) SENN News
Reproduction Expected and Welcome
(just correct any spellin errors first!)