Why are you not supposed to pay off tax deductable income?
I understand that the interest is tax deductible but from my point of view it doesn't make sense to pay a dollar in interest to save 15 cents on your tax bill.
For example. I have a rental property with a mortgage of $175k and an additional balance on my heloc (for the downpayment) of $40k The interest paid on my Heloc for 2017 was $1,495.00. I can deduct this interest from my income but it doesn't save me $1,495.00 from my tax bill. It saves me $200 based on my tax bracket. So if I'm able to pay off the heloc portion entirely today why shouldn't I? Why should I pay $1495.00 In interest to save $200 off my taxes? Even if I was in the highest tax bracket possible the tax savings wouldn't make up for the interest paid.
From my point of view paying off my heloc would do the following
A) Save me $1295.00 in interest each year
B) Not that I need it but it would free up some cash flow not having to make monthly payments to my heloc
What am I not understanding?