After I "net" the income? Are you saying for instance, that if I am in a 15 percent tax bracket, I will get a small benefit for this deduction whereas if I am in a 39 percent bracket I will receive a greater benefit? If not, what are the implications of what you are saying?
If your only income is a LP distribution, you can't match your mortgage debt against it unless you took out the mortgage specifically to make the LP investment. I meant that reporting
your LP income and mortgage interest on your personal tax return
) would give some netting. If you are in a low bracket, mortgage interest likely produces a marginal tax benefit at your bracket, so low income (15% bracket) will only allow low tax benefits (15%) with mortgage interest. Include the notion that a standard deduction
is part of the math, and your mortgage interest may generate much less than the 15% bracket savings.
advice suggests that having deductible mortgage interest is a good idea when you are in the higher brackets, such as 39%. I do not give this advice.
If your investment portfolio generates a higher return than paying off a mortgage, one can see the wisdom of retaining a net higher return. Since your question does not refer to higher portfolio returns, this is not applicable.
Unearned income is a larger class of income, and includes LP distributions as well as portfolio income, like interest and dividends. Unearned income is a more prominent class of income now because this income class will be subject to a Medicare
3.8% surtax. LP income like yours is also considered passive. Both passive and portfolio incomes are considered unearned.
Thanks again for asking at Just Answer.