Mortgage Interest Deduction in danger.... - Page 3 - TigerDroppings.com

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MoreOrLes
LSU Fan
Member since Nov 2008
16555 posts

re: Mortgage Interest Deduction in danger....


quote:

I have always wondered why interest paid for a home mortgage is given deductible status.

I, for one, would like to see the mortgage interest deduction phased out over a given time period for existing borrowers.



Im a little shocked at your opinion. (I consider you and flask a few of the better posters on the MB). Nonetheless you are entitled to your op.

I for one believe there are many many mortgage's in the 150+ range.
i think any reform to the Mortgage Interest Deduction would be detrimental to the housing market. A market, i remind you thats already been interfered with by artificially lowering mtg rates.

If the powers that be want to do any thing they should scrap the whole tax code and stream line the IRS both done by going to a fair tax based on consumption. JMO

One things for sure "Reforming" the Mortgage Interest deduction and the IRS in general are being used as tools to re distribute wealth. Someone please show me where the US Constitution allows for that.






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Cold Cous Cous
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TD OG
Member since Oct 2003
13428 posts
 Online 

re: Mortgage Interest Deduction in danger....


quote:

I have always wondered why interest paid for a home mortgage is given deductible status.

I, for one, would like to see the mortgage interest deduction phased out over a given time period for existing borrowers.

Agreed 100% on both counts. Yet another government giveaway that enormously benefited baby boomers, but will be 86'ed before most millenials can take advantage.






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Cold Cous Cous
LSU Fan
TD OG
Member since Oct 2003
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re: Mortgage Interest Deduction in danger....


quote:

Someone please show me where the US Constitution allows for that.

Sure, as soon as you show me the clause that says that renters should be charged higher taxes on the same income just because.

quote:

i think any reform to the Mortgage Interest Deduction would be detrimental to the housing market.

More accurately, having the deduction in the first place has artifically propped up the housing market for years by acting as an implicit government subsidy to homeowners. Not even homeowners; mortgage owners, because you get no benefit if you own your home outright.






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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
80167 posts

re: Mortgage Interest Deduction in danger....


quote:

i think any reform to the Mortgage Interest Deduction would be detrimental to the housing market. A market, i remind you thats already been interfered with by artificially lowering mtg rates.
The "artificial lowering mtg rates" is a perfect time to begin a phase out of the deduction, since the deduction is not nearly as significant as it was when rates were higher.

As another poster has already pointed out, many (if not most) borrowers don't qualify for the deduction because it is less than the standard deduction because of the current low interest rates.

I'm not referring to canceling the deduction overnight. I'm saying something along the lines of allowing 90% of the interest to be deductible in the first year, 80% the next year, 70% the third year and so on until after 10 years the deduction goes away.

As far as hurting the real estate market, Canada has never had the mortgage interest deduction and their home ownership percentage is higher than in the United States.

That's why I think the sacred cow mortgage interest deduction is just another government subsidy which distorts the market and helps create housing bubbles.






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tirebiter
LSU Fan
ATL
Member since Oct 2006
5135 posts

re: Mortgage Interest Deduction in danger....


quote:

As far as hurting the real estate market, Canada has never had the mortgage interest deduction and their home ownership percentage is higher than in the United States.


I guess most of the doomsayers either don't recall or never knew that consumers could deduct revolving/consumer debt and vehicle loan interest back in the day, which was phased out years ago. Now consumers don't think twice about financing a $50k truck for 7-years with no tax deduction, certainly didn't hurt anyone but the buyers thinking that is a smart move and credit card spending and borrowing has done nothing but go up. If the powers that be were to suspend the deductibility of mortgages on investment property, then that would be a different scenario and I don't see it happening. I don't think second homes should ever have been allowed the interest deduction, either. Why subsidize those that clearly don't need the tax payer support?






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MoreOrLes
LSU Fan
Member since Nov 2008
16555 posts

re: Mortgage Interest Deduction in danger....


quote:

doomsayers



In our current environment why would anyone believes that paying more in taxes is a good thing is beyond me.

I get what Russian is saying but what im saying is....certainly not now. It already feels like those that actually produce in society are getting squeezed .....this is yet another way.

Again, everybody is entitled to their opinion. I just dont see how devaluing any housing bracket is a good thing.






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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
80167 posts

re: Mortgage Interest Deduction in danger....


quote:

. I just dont see how devaluing any housing bracket is a good thing.

This is our real disagreement.

Any increase in the value of housing related to the mortgage deduction is a market distortion via a government subsidy, IMO. Over the long haul, that distortion does more economic harm than good.






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MoreOrLes
LSU Fan
Member since Nov 2008
16555 posts

re: Mortgage Interest Deduction in danger....


quote:

This is our real disagreement.



Yes i know

quote:

Any increase in the value of housing related to the mortgage deduction is a market distortion via a government subsidy, IMO.


Since the early 1900's
Even if you are correct, the forced market correction effect would be larger than anyone thinks. Sustainability of that negative reaction could be argued but is pointless. Any change ripple in the already fragile artificially affected housing market could be very bad.

Imagine a phase out of the deduction along with 8+% rising rates = terrible stagnation at the least.

I cant support it. What i can support is an across the board fair tax to replace the system we have.



This post was edited on 7/11 at 10:07 am


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tirebiter
LSU Fan
ATL
Member since Oct 2006
5135 posts

re: Mortgage Interest Deduction in danger....


quote:

In our current environment why would anyone believes that paying more in taxes is a good thing is beyond me.

I get what Russian is saying but what im saying is....certainly not now. It already feels like those that actually produce in society are getting squeezed .....this is yet another way.


Overwhelmingly, if home buyers utilized their brains and did the math, the overwhelming majority would realize that they will not be able to itemize and the standard deduction will be utilized. Realtors blather on about tax savings when most buyers won't realize any. That's the fact, so, yes, it supports those with large borrowing capacity and those that have higher income and other investments/business interests that can be aggregated for much higher deductions and tax relief. Say an average family with $65-100K income, it does little if anything for them. It is what it is, don't make it out differently, and anyone who has borrowed money the last 4+ years has been thrown a large bone with very low rates which will save them a lot of money vs what a more normalized rate environment would cost.






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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
80167 posts

re: Mortgage Interest Deduction in danger....


quote:

Since the early 1900's
Huh?

quote:

Even if you are correct, the forced market correction effect would be larger than anyone thinks.
That has not been the case in other countries.

Most developed countries do not have a home mortgage interest deduction and their housing market has not suffered from it. In fact, only the Netherlands, Switzerland and the U.S. allow a full deduction for home mortgage interest.

I'm certainly not advocating dropping the mortgage deduction just to increase income tax collections. I would favor dropping the marginal tax rates to offset the increase in taxes collected resulting from abolishing the mortgage deduction. That alone would probably offset any negative effects on the housing market and would remove a market distortion.






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MoreOrLes
LSU Fan
Member since Nov 2008
16555 posts

re: Mortgage Interest Deduction in danger....


quote:

it supports those with large borrowing capacity and those that have higher income and other investments/business interests that can be aggregated for much higher deductions and tax relief.



Yes lets continue to punish them. Thats part of my point.






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MoreOrLes
LSU Fan
Member since Nov 2008
16555 posts

re: Mortgage Interest Deduction in danger....


quote:

Huh?


Thats how long the deduction has been in existence.

quote:

That has not been the case in other countries.


So?


quote:

I would favor dropping the marginal tax rates to offset the increase in taxes collected resulting from abolishing the mortgage deduction. That alone would probably offset any negative effects on the housing market and would remove a market distortion.



Now thats some common ground. The problem is our govt never really removes ant taxes they only add them.






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tirebiter
LSU Fan
ATL
Member since Oct 2006
5135 posts

re: Mortgage Interest Deduction in danger....


quote:

Yes lets continue to punish them. Thats part of my point.


I'm not being punished not having a mortgage right now. If I want to use capital and borrowing capacity I would find something other than a personal residence with a hoped for deduction to lever up with an assumed ROI = to the inflation rate, which is what the US residential housing market has done long term. There are better alternatives than people believing a mortgage is going to provide them a large tax shield and probably don't even know the tax impact on their next 1040 filing because they haven't run the numbers. Simplifying the tax code is past overdue, but if someone is counting on a mortgage deduction to get them into a personal residence then they are likely buying too much home.






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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
80167 posts

re: Mortgage Interest Deduction in danger....


quote:

That has not been the case in other countries.



So?
It's evidence that your logic is invalid.






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dat yat
LSU Fan
Chef Pass
Member since Jun 2011
1364 posts

re: Mortgage Interest Deduction in danger....


quote:

quote:
Close to half of homeowners with mortgages—mostly lower and middle-income families—received no benefit from the deduction, according to Fisher.



What a pile of bull shite.....


I was there for a while when I had a double. Half the interest was a deduction on the rental income form. The remainder was not enough to exceed the standard deduction without exaggeration on charitable contributions. So I did not itemize.

My place is paid off, but I want my kids to have that deduction. The middle and upper-middle class could be hit hard by this. The wealthy and poor won't feel a thing.






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