Real Estate and Taxation

Discussion in 'Taxes and Accounting' started by Satyrican, Dec 11, 2005.

  1. Hi,

    I have a somewhat dumb question for you guys. I had a decent year trading in 2005, and as a result, my tax billed is much higher than I anticipated. In any case, I want to know is it possible to defray some of the tax bill through real state..

    Here's my thinking (and please critique freely). Let's say that I have a tax bill of $40,000 for the next Twenty years (strictly hypothetical) and that I live in Massachusetts... why dont I buy a house in california (which I plan to move there in the future, say for retirement) as a second home.

    The mortgage payment annually let say is $42,000 for this house.

    If I made this purchases. I would be getting a tax return because the mortgage payments (probably more because you can deduct other things like expenses for house improvement) is higher than my tax bill.

    So in essences, I am getting this house basically for free... except for the mandatory 20% down payment..

    Seems too good to be true.. am I correct in my assessment?