It doesn't matter how many deductions you take. You have to take at least the AMT.
Now, the home-interest credit on AMT will only apply on the mansion, not the yacht. Furthermore, you can only deduct the interest-payments on your $7-million mansion. FYI: spending $1 on interest to save on 28-cents (assuming you're applying to AMT) on income-taxes is really, really bad finances.
Yachts count as homes. http://www.boatus.com/pressroom/release.asp?id=760
Read your own link again:
For those who fall under the Alternative Minimum Tax, most deductions are unavailable. Boaters are urged to contact a tax preparer or financial advisor for more information.
The explicit point of the AMT is to prevent rich people from gaming the system too much.
You all bring up good points, but what I wanted to illustrate was the big difference between a tax deduction for the rich, vs a tax deduction for the poor. If the rich get most of the benefit from a tax initiative, why not appropriate money, and send out grants?
Because the mortgage interest adjustment isn't a "benefit". Its the "lack of a penalty".
If you have a $7 million home on a 30-year loan, you will be paying roughly $121,000 per year in interest
(more early on, less later, assuming 3.6% rate... which is not how a jumbo-loan works but whatever, I forgot about that before using the mortgage calculators). You will also
be paying that $7 million over those 30 years. (The $121,000 per year is straight profit from the banks). Its not like "the rich" are profiting from this sort of arrangement.
So its not like buying massive homes is a good way to "save on taxes", because you still end up owing tons of money to the bank anyway.
The home mortgage interest tax deduction exists because we believe that people should be encouraged to own homes in America. (for better or for worse). Its applied to everyone equally, rich or poor. It still doesn't necessarily make big-home purchases affordable, nor does it magically stop payments to the bank (which is where the majority of the costs go). Its just a little bit of help to encourage home-ownership.
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