I was talking to my neighbor the other day. She mortgage a property down the shore. She was able to get a tenant on the property and charges her rent. The rent is $200 dollars more than the monthly mortgage she pays.

So each month she makes a profit of $200 if a tenant is there. The property is near the beach so there always people willing to rent. She was thinking of kicking out the renter and using her beach property on the weekends for her daughter and herself.

Her accountant said is was a bad idea. It was better for her to rent and make that profit over time. It was not wise to kick out the tenant just so she can view the beach with her daughter. It was better for her to rent other property the few times she wanted to go to the beach. 

In addition to that, the accountant went further. He said she should never buy the property. She should always keep it mortgaged. The reason was the huge tax deduction she would get at the end of the year. She had a 30 year mortgage on it with 5 years paid. The accountant told her that as she neared the end of the mortgage she should refinance for a longer term. So for example if she was in the 25 year she could refinance for 15 years. She should continue doing that process indefinitely.

I told her she was lucky to find a person who could give such good advice. So if you own rental income property, consider keeping it mortgaged indefinitely for the tax benefit.