Taxes for the Wealthy
What you should know about the tax saving myths and ways to reduce taxes for the wealthy
We’ve all heard about the taxes for the wealthy and the certain things that we can do in order to reduce them. On top of that, we certainly thought that some of these so called “solutions” were really clever. However, many of them are actually myths and in the following paragraphs, we’ll debunk some of them and show you exactly what you need to know.
1. Getting a mortgage for tax deduction
The fact that the majority of homeowners can deduct most or all of the interest they pay on a mortgage is no myth, but something that’s actually very true. On top of that, the deduction is impactful enough that it reduces your taxable income each and every year, so that’s great. However, many pursue indebtedness for the main purpose of having a tax deduction, which is something foolish to say the least. In this case, you’ll actually pay the bank 1 dollar so you can save 1 quarter.
Keep in mind that you won’t get a deduction for all of your mortgage payment, but only the interest part of it. Thus, if you’re close to being retired and you have a decade left on your 3 decade mortgage and also received advice that it’s a good idea to keep the mortgage to keep the deduction, you should be aware of the fact that you’re not getting much of a deduction at that point at all. A better alternative for you would be to pay the mortgage off if you can afford it, so you can rest assured without worrying about the payment when you retire.
2. You can’t sell your stock, so you need to pay the capital gains tax
Cisco, which is an important name in the technology boom of the late 90s, actually has a very interesting story to tell. For instance, let’s consider that you bought 1K of shares from Cisco in 1998 for 12000 dollars. In December 1999 you were very happy with your decision, sitting with a great Cisco position of over 50K dollars, but then you’d receive a call from Uncle Lou telling you to sell your stock, because it’s overvalued. Even if soon your position would be of 80000 dollars, in September 2001, you’d be back to your initial investment. You won’t have to worry about capital gains at all, because you have no gain anymore.
3. Getting help from an estate planning attorney
It’s only natural that you will get in touch with an estate planning attorney who can help you with preparing your taxes properly. Such professionals have a lot of experience and have helped hundreds of people who were in the same situation as you are, so by going with his services, you’ll be able to save money on taxes and also ensure your assets are protected. On top of that, by getting in touch an estate planning attorney you’ll ensure there’s nothing significant you’re missing out on.
With that being said, this is everything you need to know about taxes for the wealthy, so good luck with whatever decisions you’ll take so you’re taxed as little as possible if you’re rich.
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