Some characteristics of good debt include: Low interest rate, asset backed, long amortization, and
tax-deductible interest. Characteristics of bad debt can include: High interest rate, not backed by an asset, short amortization, and non-deductible interest.
In addition, paying down a loan without tax benefits is better than paying down a loan with
tax-deductible interest. If you took the standard deduction for 2018 rather than itemizing your deductions, and likely will do the same in 2019, prepaying your home loan is a better deal.
Admati and her coauthors argue that catastrophe bonds are not a unique cure and are favored by most analysts because of the
tax-deductible interest. Rather than catastrophe bonds, the authors argue that a new kind of equity with requirements on periodic payouts (dividends are mandatory rather than discretionary) to prevent managerial shirking should replace debt in the capital structure debt of financial institutions.
265(a)(2) was to stop taxpayers from borrowing funds with
tax-deductible interest and using them to invest in tax-exempt debt.
They allow the issuer to make
tax-deductible interest payments, which reduce the issuer's cost of capital, while also providing equity-like benefits similar to traditional preferred stock.
NORDIC BUSINESS REPORT-30 September 2004-Sweden might abolish
tax-deductible interest rule for Danes - report(C)1994-2004 M2 COMMUNICATIONS LTD http://www.m2.com
Announcer: With a low rate and the potential for
tax-deductible interest, a home equity line of credit is an ideal way to handle almost any expense that comes up.
For the real estate minded individual, retirement funding hat one big advantage over real estate spending; it is completely excludable from taxation, as opposed to simply bearing
tax-deductible interest payments.
While homeowners indifferently enjoy the benefits of
tax-deductible interest associated with the mortgage on their home, many do not realize the array of limitations and other landmines that Congress has subtly added to the tax code in order to chip away at this sacred cow.
