• Taxable investment accounts • Cash reserves • Maybe business interests or other assets Putting too much into just one house can tilt that balance. 4. You May Miss Out On Useful Mortgage Benefits Under current law, homeowners who itemize can deduct mortgage interest on up to 750,000 dollars of qualified acquisition debt on a primary and second home combined, with older loans sometimes subject to a higher limit. In addition, recent federal changes kept that 750,000 dollar mortgage interest cap in place and significantly increased the SALT deduction cap from 10,000 dollars to 40,000 dollars per year for many taxpayers, which makes it more likely that some higher income New Jersey homeowners will actually see a tax benefit from their combined property taxes and mortgage interest if they itemize. You should talk with your CPA about this, because the real benefit depends heavily on your income, filing status, other deductions, and whether you itemize or take the standard deduction. The key point is this: in some situations, carrying a reasonable mortgage can come with tax advantages that soften the cost of interest. Just because you have the assets to make a cash purchase, doesn't always mean you should. The Case For Keeping A Mortgage (Even If You Could Pay Cash) Let us look at the flip side. There are several reasons higher income buyers in New Jersey often choose to keep a mortgage even when they could technically pay cash.
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