Q:

Is it possible to make money by getting a mortgage?

I met with a financial advisor for the first time yesterday (trying to get my things in order for retirement).  During our meeting he told me a story that sounded pretty impressive, but the more I think about it, the more I don't understand how it would work.  

I have a rich client who is retired.  He was paying a fortune in
  taxes.  I  advised him to take out a mortgage on his already paid off
  house.  Thanks to  the deductions the house gave him, he actually paid
  less on the mortgage and  his taxes than he was before.

(This is all in the US, by the way.)
He went into more detail about how it was tricky to get the mortgage and it all sounded very creative.  But my very limited understanding is that this is impossible.  The deductions you get from the interest on your mortgage will reduce your taxable income, but it's only going to reduce your tax burden by something like 30% (optimistically).  
If I reduce my taxable income by $1, and I'm paying 30% in taxes, I've saved .30 off my taxes, but I still have .70 less than I would have if I just did nothing.  At least, that's how I understand it.
Now, I get that it's different if you are comparing renting a house verse buying a house - because things like the value of the home become a factor.  If the house appreciates or depreciates it changes the numbers drastically - but in this story, the guy already owned the same house, so it has no impact.
This guy is a professional and had a bunch of certifications and what not on his desk....but it just sounds completely wrong to me.  Can someone explain what I'm missing?

A:

To keep the math simple, say you are in the 25% federal tax bracket. Your 4% mortgage effectively costs you 3%. Did Mr Advisor tell you what he suggests investing the money in? Borrowing at 3% net to put the money in .1% CDs makes little sense. And for most people, investing it in the stock market hoping to come out ahead, also makes little sense. 
Credentials or not, people like him give humans a bad name, and make me love my dog even more. I'd stay far away from this guy. Very far away. 
Edit - on further reflection (seeing mhoran's reference to $100K) it occurred to me that once a house is paid off, the only deductions allowed is for the first $100K of new mortgage or HELOC, absent a renovation or improvement of some kind. Given the limit and current 4% rates, it would seem to me that a rich retiree paying a fortune in taxes, isn't going to benefit much for a $4000 deduction. 

A:

Imagine a married couple without a mortgage, but live in a house fully paid for. They pay state income taxes, and property tax, and make charitable deductions  that together total $12,599. That is $1 below the standard deduction for 2015, therefore they don't itemize. 
Now they decide to get a mortgage: $100,000 for 30 years at 4%. That first year they pay about $4,000 in interest. Now it makes sense to itemize. That $4,000 in interest plus their other deductions means that if they are in the 25% bracket they cut their tax bill by $1,000. These numbers will decrease each year. 
If they have a use for that pile of cash: such as a new roof, or a 100% sure investment that is guaranteed make more money for them then they are losing in interest it makes sense. But spending $4,000 to save $1,000 doesn't.
Using the pile of cash to pay off the new mortgage means that the bank is collecting $4,000 a year so you can send $1,000 less to Uncle Sam. 

A:

Sounds like a poorly written piece at best...
The way you make money with a mortgage, if you're careful and/or lucky and/or patient, is to use that loan to make leveraged investments. If the return on the investments is higher than the interest on the loan, you win. Of course if the investments don't do well you can lose money on this deal... but at current interest rates it isn't that hard to make a profit on this arrangement, especially if you can get the tax deductability helping you.

