Tax deductions on car and/or home?
If you itemize your deductions then the interest that you pay on your primary residence is tax deductible. Also realestate tax is also deductible. Both go on Schedule A. The car payment is not tax deductible.  You will want to be careful about claiming business deduction for home  or car. The IRS has very strict rules and if you have any personal use you can disqualify the deduction. For the car you often need to use the mileage reimbursement rates. If you use the car exclusively for work, then a lease may make more sense as you can expense the lease payment whereas with the car you need to follow the depreciation schedule.  If you are looking to claim business expense of car or home, it would be a very good idea to get professional tax advice to ensure that you do not run afoul of the IRS.
For stocks, bonds, ETF funds and so on - Taxed only on realised gain and losses are deductible from the gain and not from company's income. Corporate tax is calculated only after all expenses have been deducted. Not the other way around. Real estate expenses can be deducted because of repairs and maintenance.  In general all expenses related to the operation of the business can be deducted. But you cannot use expenses as willy nilly, as you assume. You cannot deduct your subscription to Playboy as an expense. Doing it is illegal and if caught, the tours to church will increase exponentially. VAT is only paid if you claim VAT on your invoices. Your situation seems quite complicated. I would suggest, get an accountant pronto. There are nuances in your situation, which an accountant only can understand and help. "Not sure what you are talking about.  The house isn't part of a business so neither of you can deduct half of normal maintenance and repairs.  It is just the cost of having a house.   The only time this would be untrue is if the thing that you are buying for the house is part of a special deduction or rebate for that tax year.  For instance the US has been running rebates and deductions on certain household items that reduce energy - namely insulation, windows, doors, and heating/cooling systems (much more but those are the normal things). And in actuality if your brother is using the entire house as a living quarters you should be charging him some sort of rent.  The rent could be up to the current monthly market price of the home minus 50%.  If it were my family I would probably charge them what I would pay for a 3% loan on the house minus 50%.   Going back to the repairs... Really if these repairs are upgrades and not things caused by using the house and ""breaking"" or ""wearing"" things you should be paying half of this, as anything that contributes to the increased property value should be paid for equally if you both are expecting to take home 50% a piece once you sell it." The answer on the Canadian Government's website is pretty clear:  Most employees cannot claim employment expenses. You cannot deduct the   cost of travel to and from work, or other expenses, such as most tools   and clothing. However, that is most likely related to a personal vehicle. There is a deduction related to Public Transportation:  You can claim cost of monthly public transit passes or passes of   longer duration such as an annual pass for travel within Canada on   public transit for 2016. The second sleeping residence is hard to justify as the individual is choosing to work in this town and this individual is choosing to spent the night there - it is not currently a work requirement.  As always, please consult a certified tax professional in your country for any final determinations on personal (and corporate) tax laws and filings. "You will need to see a tax expert. Your edited question includes the line For the short term, we will be ""renting"" it to my wife's grandmother at a deep discount. According to the instructions for schedule E If you rented out a dwelling unit that you also used for personal   purposes during the year, you may not be able to deduct all the   expenses for the rental part. “Dwelling unit” (unit) means a house,   apartment, condominium, or similar property. For each property listed on line 1a, report the number of days in the   year each property was rented at fair rental value and the number of   days of personal use. A day of personal use is any day, or part of a day, that the unit was   used by: I have no idea how this will work for Schedule C." Very grey area. You can't pay them to run errands, mow the lawn, etc. I'd suggest that you would have to have self employment income (i.e. your own business) for you to justify the deduction. And then the work itself needs to be applicable to the business. I've commented here and elsewhere that I jumped on this when my daughter at age 12 started to have income from babysitting. I told her that in exchange for her taking the time to keep a notebook, listing the family paying her, the date, and amount paid, I'd make a deposit to a Roth IRA for her.  I've approaches taxes each year in a way that would be audit-compliant, i.e. a paper trail that covers any and all deductions, donations, etc. In the real world, the IRS isn't likely to audit someone for that Roth deposit, as there's little for them to recover. In the US there's no significant difference between what a business can deduct and what an individual can deduct. However, you can only deduct what is an expense to produce income. Businesses are allowed to write off salaries, but individuals can't   write off what they pay their gardener or maid (at least in the US) If you're a sole proprietor in the business of managing properties - you can definitely deduct payments to gardeners or maids. Business paying for a gardener on a private property not related to producing the income (like CEO's daughter's house) cannot deduct that expense for tax purposes (although it is still recorded in the business accounting books as an expense - with no tax benefit). Businesses are allowed to deduct utility expenses as overhead, individuals cannot Same thing exactly. I can deduct utility expenses for my rental property, but not for my primary residence. Food, shelter, clothing and medical care are fundamental human needs,   but we still pay for them with after-tax money, and pay additional   sales tax. Only interest (and not principal) on a mortgage is   deductible in the US, which is great for people who take out mortgages   (and helps banks get more business, I'm sure), but you're out of luck   if you pay cash for your house, or are renting. Sales taxes are deductible. You can deduct sales taxes you paid during the year if you itemize your deduction. You can chose - you either deduct the sales taxes or the State income taxes, whatever is more beneficial for you. BTW in many states food and medicine are exempt from sales tax. Medical expenses are deductible if they're significant compared to your total income. You can deduct medical expenses in excess of 10% of your AGI. With the ACA kicking in - I don't see how would people even get to that. If your AGI is low you get subsidies for insurance, and the insurance keeps your expenses capped. For self-employed and employed, insurance premiums are pre-tax (i.e.: not even added to your AGI). Principle for mortgage is not deductible because it is not an expense - it is equity. You own an asset, don't you? You do get the standard deduction, even if your itemized (real) deductions are less - business don't get that. You also get an exemption amount (for your basic living needs), which businesses don't get. You can argue about the amounts - but it is there. In some States (like California) renters get tax breaks for renting, depending on the AGI. CA renters credit is phasing out at AGI of about $60K, which is pretty high. They do give tax breaks for efficient furnaces, tankless water heaters, even LED lights. Homeowners can use their interest deduction to buy such items. There have been huge tax breaks for electric cars too.  Are you serious right now? If your deductions are higher than the standard deduction, you will be able to subtract property taxes from your income. In your example, that means that taxes are computed based on $95,000. In 2011, the standard deduction varies between $5,800 (single filer) and $11,600 (married filing jointly). Tax credits are subtracted from your tax obligation. The most common tax credit for most people is student loan interest. If you pay $500 in student loan interest, that sum is subtracted from your tax bill. If you take the statement you quote as stated, it is indeed absurd. Unless you have a really creative tax accountant or live in a country with very unusual tax laws, any tax deduction you get for mortgage interest is going to be less than the interest. You don't come out ahead by getting a $25 deduction if you had a $100 expense to get that deduction. Where there can be some sense behind such a statement is if you consider the alternative to paying cash for a house or making extra payments against a mortgage. If you had $100,000 in cash in a box under your bed, and the choice is between, (a) use that $100,000 to buy a house in cash, or (b) borrow $100,000 at 6% interest and leave that cash in the box under the bed, than clearly (a) is the better choice because it saves you the interest expense. But if the choice is between, (a) buy a house for $100,000 in cash and borrow $100,000 at 6% to buy a car; or (b) borrow $100,000 at 6% interest to buy a house and use the $100,000 cash to buy the car, (b) is the better choice. The home mortgage loan is tax deductible; the car loan is not. As others have pointed out, if instead of using some extra cash to pay down the principle on your mortgage you used that money to invest in the stock market, it is likely that you would get better returns on the investment than what you would have saved in interest on the mortgage -- depending, of course, on how the market is doing and how well you pick stocks. But the key issue there isn't the tax deduction, it's the comparison of the profits from the investment versus the opportunity cost of the money that could have been saved on the mortgage interest. The tax deduction affects that comparison by effectively reducing the interest rate on the mortgage -- your real interest expense is the nominal interest minus the deduction -- but that's not the key point, just another number to plug in to the formula. By the way, given the complexity of U.S. tax law, I would not rule out the possibility that there could be some scenario where you really would save money by having mortgage interest. There are lots of deductions and credits that are phased out or eliminated as your income goes up. Perhaps you could find some set of tax laws that apply to you such that having an additional $1000 in interest expense lets you take a $300 deduction here and a $500 credit there, etc, and they add up to more than $1000. I don't know if that could actually happen, but the rules are complicated enough that, maybe. Any tax accountants here who can come up with such a scenario? Kate Gregory has already covered maintenance and tools. As a one-off, there's furniture and soft furnishings for the home. Cable/satellite TV if you want it. You listed car insurance, but not fuel, servicing, repairs and depreciation/leasing (as applicable). And, there's also food. In the US, mortgage payments are not deductible. What is deductible is the mortgage interest (to a limit). That, as well, is not deductible unconditionally, but rather as part of your itemized deductions on Schedule A of your yearly tax return. So if you're married and have a standard deduction of $12600 a year, live in a state with no state income tax, and your property tax and the mortgage interest are less than your standard deduction - you will not be getting any tax benefit whatsoever. That is, in fact, the case for many, if not majority, of the US mortgage payers. So in order to get a proper estimate, you need to take into account all the aspects of your tax calculations, which are by nature quite personal, and simulate the changes with the mortgage interest deduction. Most tax preparation software will allow you creating multiple files, so you can run the numbers for different scenarios. Tax regulations vary from country to country - some permitting more deductions, some less - but here are a few guidelines. As regards the home-office: As regards the deductions: Think of it like this: in order to have space for a home-office you needed a bigger home.  That leads to increased rates, heating, insurance and so on.  Many tax regulators recognise that these are genuine expenses.  The alternative is to rent a separate office and incur greater expenses, leading to increased deductions and less overall tax paid (which won't finance the deficit). The usual test for deductions is: was the expense legitimately incurred in the pursuit of revenue?  The flexibility permitted will vary by tax authority but you can frequently deduct more than you expected. Those choices aren't mutually exclusive.  Yes, most discussion of the mortgage interest deduction ignores the fact that for a standard itemizer, much, if not all of this deduction can be lost.  For 2011, the std deduction for a single is $5,800. It's not just mortgage interest that's deductible, state income tax, realestate tax, and charitable contributions are among the other deductions. If this house is worth $350K, the property tax is about $5K, and since it's not optional, I'd be inclined to assume that it's the deduction that offsets the std deduction. Most states have an income tax, which tops off the rest. You are welcome to toss this aside as sophistry, but I view it as these other deductions as 'lost' first.  I'm married, and our property tax is more than our standard deduction, so when doing the math, the mortgage is fully deductible, as are our contributions.  In your case, the numbers may play out differently. No state tax? Great, so it's the property tax and deductions you'd add up first and decide on the value the mortgage deduction brings.  Last, I don't have my mortgage for the deduction, I just believe that long term my other investments will exceed, after tax, the cost of that mortgage. I don't think there's much you can do. Losses from the sale of personal-use automobiles (used for pleasure, commuting, etc) are not deductible as capital losses.  See IRS Tax Topic 409, end of the first paragraph.  The expenses you incurred in owning and operating the car (insurance, fuel, maintenance, service plans, etc) are not deductible either. If you used it partly for business, then some of your expenses might be deductible; see IRS Tax Topic 510.  This includes depreciation (decline in value), but only according to a standard schedule; you don't generally just get to deduct the difference between your buying and selling price.  Also, you'd need to have records to verify your business use.  But anyway, these deductions would apply (or not) regardless of whether you sell the car. You don't get your sales tax refunded when you resell the vehicle.  That's why it's a sales tax, not a value-added tax.  Note, however, that if you do sell it, the sales tax on this new transaction will be the buyer's responsibility, not yours. You do have the option on your federal income tax return to deduct the state sales tax you paid when you bought the car; in fact, you can deduct all the sales taxes you paid in that year.  (If you have already filed your taxes for that year, you can go back and amend them.)  However, this takes the place of your state income tax deduction for the year; you can't deduct both.  See Tax Topic 503.  So this is only useful if your sales taxes for that year exceeded the state income tax you paid in that year.  Also, note that state taxes are not deductible on your state income tax return.  Again, this deduction applies whether you sell the car or not. Your question contains two different concepts: fractional reserve banking and debt-based money.  When thinking of these two things I think it is important to analyze these items separately before trying to understand how the whole system works. Fractional Reserve Banking As others have pointed out fractional reserve banking is not a ponzi scheme.  It can be fraudulent, however.  If a bank tells all its depositors that they can withdrawal their money at any time (i.e. on demand) and the bank then proceeds to loan out some portion of the depositors' money then the bank has committed fraud since there is no way they could honor the depositors' requests for their money if many of them came for their money at one time.  This is true regardless of what type of money is deposited - dollars, gold, etc..  This is how most modern banks operate. Debt-based money Historically, the Fed would introduce new money by buying US Treasuries.  This means Federal Reserve Notes (FRN) are backed by US Treasuries.  I agree that this seems strange.  Does this mean if I take my FRNs to the Fed I could redeem them for US Treasuries?  But US Treasuries are promises to pay FRNs in the future.  This makes my head hurt.  Reminds me of the definition for recursion: see recursion. Here is an experiment.  What if we wanted to recreate FRNs today and none existed?  The US government would offer a note to pay 100 FRNs in one year and pay 5% interest on the note.  The Fed would print up its first 100 FRNs to buy the note from the US government.  The US government would spend the FRNs.  The first 100 FRNs have now entered into circulation.  At the end of the note's term the Fed should have 105 FRNs since the government agreed to pay 5% interest on the note.  But how is the US government going to pay the interest and principal on the note when only 100 FRNs exist?  I think this is the central point to your question.   I can come up with only two answers: 1) the Fed must purchase some assets that are not debt based 2) the US government must continue to issue debt that is purchased by newly printed FRNs in order to pay back older debt and interest.  This is a ponzi scheme. The record debt levels seem to indicate the ponzi scheme option was chosen.