hohenwald48 wrote: Why do folks say they do it to use the tax and interest as deductions. Isn't there something wrong with giving the state $20,000 in sales tax and the bank $20,000 in interest every year to get a $40,000 deduction that results in a $7-8,000 less federal tax bill. Aren't you still out $30,000+ that you paid to the bank and the state? Does it really make since to pay out $40,000 just to screw the IRS out of $7,000?
It does not pay. Your math is perfect, and your conclusion correct for most folks. It does not save money.
To the alternative though, for example, a farmer can buy enough fertilizer or feed in December of any year that will last him well into the next year, or even the whole year almost. So he buys $40,000 in prepaid feed and fertilizer in December and writes the $40,000 off as a bona fide picture perfect tax deduction to save maybe $12,000 in tax that year. The next year, he might do the same, again. So he is deferring the tax every year, or in other words, borrowing the $12,000 from the government in a legitimate manner.
It is a pretty similar questions on capital expenditures like trucks or equipment used in a trade or business - if you are going to purchase a new truck in Jan or Feb of next year, why not in December to get the tax benefits earlier?
The distinctions I am making are all dependent upon being engaged in a valid trade or business and bona fide tax deductions. As I stated earlier...
If you have to rationalize it.......it is not a financial decision, it is an emotional decision.
DH
Reality is that which, when you stop believing in it, doesn't go away.
--- Philip K. Dick
1999 Gulfstream Sunvoyager (Our Gulfstream Home Site)
2006 Jeep Wranger
Doberlady
German Shedder Dog
Rescued Gentleman (In Spirit)
Buying a new MH, boat or car is NEVER a finacially good idea. They are all depreciating assets and will never be worth what you paid for them....unless it's something like a Ferrari and you keep it wrapped in plastic for 25 years. BUT , since we buy these toys because we want them (or fall in love with them), there are some ways to make it less painfull. At least in Florida, you only pay sales tax on the difference price between trade and purchase. I always buy fairly lightly used to avoid the big inital deprecitation hit, and I no longer pay cash, even if I can. An Accountant asked me once why on earth I would pay cash for a deprecitating asset. Keep your money invested, finance the thing and write off the interest, the principal payment doesn't matter, you'd be paying for that anyway. My stocks historically make me about 8-10% per annum. The interest rate on my boat loan and MH loan are closer to 6%. I was losing money by paying cash. Before I retired, I used to pay for my cars using my home equity loan so I got a better rate and could deduct the interest.
The math I'm doing right now is to get a bunch of my monthly financial obligations paid off so in three years, when I'm 62 years old, I won't have to worry about the cost of gas or diesel fuel. Also, I have no intention of selling our five year old class A for the next three years. In three years I can collect SS and this bagman will still still be working. I have two elderly customers that still own and manage their respective companies and one is 84 years old and the other is 83. The 84 year old owner owns and runs the biggest produce distribution company in Detroit's Eastern Market! Both individuals have sharp minds! That is the math I'm thinking very hard about. Bagman.
deandec wrote: Motorhoming is similar to buying a bass boat, fishing gear, tow car, and cabin room to go fishing. Cheaper to buy the fish already culled and cleaned at the supermarket.
....cheaper yes, but not near the FUN!!
"Twenty years from now you will be more disappointed in the things that you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover." --Mark Twain
Who really cares what people buy...its their money. People buy what they want and if it makes sense to them, and they are happy, then they could care less what other people think.
Bill
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BUT , since we buy these toys because we want them (or fall in love with them), there are some ways to make it less painfull. At least in Florida, you only pay sales tax on the difference price between trade and purchase. I always buy fairly lightly used to avoid the big inital deprecitation hit, and I no longer pay cash, even if I can. An Accountant asked me once why on earth I would pay cash for a deprecitating asset. Keep your money invested, finance the thing and write off the interest, the principal payment doesn't matter, you'd be paying for that anyway. My stocks historically make me about 8-10% per annum. The interest rate on my boat loan and MH loan are closer to 6%. I was losing money by paying cash. Before I retired, I used to pay for my cars using my home equity loan so I got a better rate and could deduct the interest.
