On Apr 28, 9:52 am, Ron Peterson <r...@[EMAIL PROTECTED]
> wrote:
> There are several categories on interest in the tax code which brings
> up the question of what types of debt are best.
Tax deductions only function to lower the effective interest rate.
They make a certain type of debt "better" but not necessarily to the
point of being called "good debt".
> Debt to finance a personal vehicle doesn't seem to allow a tax
> deduction for the interest.
That's true, but if a vehicle is the only plausible way to get to the
job that provides significant income and the only method of obtaining
a vehicle is through an auto loan, then I would contend it is a "good
debt". In theory, the loan yields more than it costs.
> Mortgage debt on a principal home, on the other hand, does allow a tax
> deduction for the interest.
That's true also, but would you consider a current mortgage charging
20% interest to be "good debt" just because it's tax deductible?
> And, debt incurred for investment purposes also allows a tax deduction
> for the interest.
Same question as the mortgage hypothetical above
...
The moral of the story is that certain debts do get a tax deduction
which makes employing them more advantageous. However, the terms of
the debt will play a much larger factor in determining whether it is
"good" or "bad" debt.
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