Paying off house debt is always a wonderful event. Several items that you need to consider and realize is that first, selling investments that you hold to payoff the home will be a taxable event. Whether you have a capital gain or loss to report will be based on the sales price versus the cost of the investments. Also the holding period will be a factor in determining if the sale is treated as long-term or short-term. The second item to consider is that paying off the principal amount of the loan is not a taxable event and will not reduce your taxable income. The only income reduction you will realize will be the amount of investment income that you do not earn as a result of selling your investments.
