In your columns on repaying mortgage loans, you skip over a detail that I have often wondered about … I don’t think that saving 6 percent interest on a mortgage is quite the same as earning 6 percent on other investments because mortgage interest is deductible … I get further confused by the possibility that the income taxes due on other investments may be deferred if they are in a 401K or other [tag]tax-deferred retirement account[/tag]….

In numerous articles, I have argued that [tag]mortgage repayment[/tag] should be viewed as an investment with a yield equal to the [tag]mortgage rate[/tag] — and that this yield should be compared to those available on other low-risk investments. The “low-risk” qualifier is important, because mortgage repayment has zero risk to the borrower. You are right that in making such comparisons, account should be taken of possible different tax treatment. Mortgage interest is always deductible on first mortgages up to $1 million, but other investments can be subject to different tax rules. Four different situations are worth distinguishing.

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