The Tax Impacts of Home Mortgage Refinancing: An Analysis and a Model

Rich Fortin and Stuart Michelson

Journal of Real Estate Literature, 2005, vol. 13, issue 2, 189-202

Abstract: This paper provides pertinent information for investors about refinancing their mortgages. It discusses the input variables and how to compute the breakeven number of months when deciding to refinance a mortgage. Interest rate tax effects that are normally ignored by investors when making their refinancing decision are incorporated. A number of scenarios are provided that vary the mortgage amount, term and interest rate. Depending on the term and interest rate, the breakeven varies from two to six years for a $200,000 mortgage and from two and a half years to ten years for a $100,000 mortgage. When considering the value of the lost interest deduction, the number of months required to breakeven increases by about 50%. An Excel model was developed to perform this analysis.

Date: 2005
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/10835547.2005.12090157 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:rjelxx:v:13:y:2005:i:2:p:189-202

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rjel20

DOI: 10.1080/10835547.2005.12090157

Access Statistics for this article

Journal of Real Estate Literature is currently edited by Sophia Dermisi and Kimberly Winson

More articles in Journal of Real Estate Literature from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().