But it is wrong. You are now better off by $30,000 either as increased profit - or a decrease in losses, so the $30,000 is taxable, therefore it has improved your income only by $20,000, (using the same 33 % in your 45 to 30k example) To gain 30,000 in your pocket, your interest savings would need to be 45,000; It's no different than if you had worked for it. The taxman doesn't care how you got it. He still wants his bit. Still, it's a long way better than a kick in the butt (or working for it) !