There have been numerous headlines about the volume of All Cash home buyers, especially among the very wealthy. Yes, many buy with Cash but many cash out and most end up financing, just differently than most buyers.
If you close on a $3m home, all cash, you can 'refinance' later via a Home Equity Loan or a Home Equity Line of Credit (HELOC). If you are refinancing your entire mortgage to take out cash, it is called a cash-out refinance. While there is a $750k cap (married couples, $375k for singles) on how much you can tax deduct, if you use the cash to "buy, build, or substantially improve" the home that secures the loan, the interest on the new loan (including the cash-out portion) is generally deductible. This is true if it's used for investment purposes too, known as a Margin loan. It is generally limited to 30% of your Adjusted Taxable Income but if the borrowed money is for a business that averages less than $31 million in gross receipts (for 2025), you may be exempt from the 30% limit.\
Now comes the better part. Most wealthy people do not take out 30-year fixed-rate mortgages. Many take out loans against equity at lower rates, not paying any principal, only interest. So if you get a loan for around 5.5% (some with relationship banking and strong credit scores do better), but you can earn a greater return on your investments, the upside is both in investment returns and the deductibility of all interest payments.
Always check this with an accountant or lawyer, as I'm merely identifying potential opportunities worthy of exploration. The downside is that Margin loans can have margin calls if the value of the investment falls. Nothing is perfect anywhere.
