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re: Do you think they will take away the Mortgage interest deduction?
Posted on 4/13/11 at 12:02 pm to Tiger JJ
Posted on 4/13/11 at 12:02 pm to Tiger JJ
quote:
meh
can you expand? just as you mentioned above, regardless of the actual knowledge level of the consumer about how the deduction works I don't think there is any doubt that it is taken into effect for the average home buyer as an advantage to taking on that debt
1
Posted on 4/13/11 at 12:29 pm to Shankopotomus
quote:
can you expand?
I meant more that I don't actually care if it's "bad for housing", as that really only means "it's bad for the biggest banks".
Posted on 4/13/11 at 12:32 pm to Cold Cous Cous
quote:
we're in a situation where a renter like myself has to subsidize folks who make $200,000 a year to make sure they can buy a 3,000 sf home.
Would you explain how renters are subsidizing homeowners?
Posted on 4/13/11 at 12:32 pm to Tiger JJ
Well whether we like it or not, the two are so intertwined now that it all goes together. Without the banks keeping rates affordable for the consumer, housing starts/sales go down and many sectors of the economy suffer right along with it.
For an investor (whom I presume owns rental property) this is good news as we will have more renters than owners....
For an investor (whom I presume owns rental property) this is good news as we will have more renters than owners....
Posted on 4/13/11 at 12:35 pm to Shankopotomus
quote:
Well whether we like it or not, the two are so intertwined now that it all goes together. Without the banks keeping rates affordable for the consumer, housing starts/sales go down and many sectors of the economy suffer right along with it.
Eh. They're already so low, I don't see a big downside from here in that regard.
quote:
For an investor (whom I presume owns rental property) this is good news as we will have more renters than owners....
Yeah, that's also what I meant. It's really unclear to me that housing going down is bad.
Posted on 4/13/11 at 12:37 pm to Dusty Bottoms
quote:
Would you explain how renters are subsidizing homeowners?
Imagine two otherwise identical people - same income, same # of dependents, etc. They both live in the same size house and pay the same housing bill per month. Presumably they'd pay the same amount of income tax.
But one rents and one pays a mortgage note. The renter will pay a higher percentage of his income in income taxes for no other reason than he is a renter. One guy pays more taxes so the other guy can pay less.
Posted on 4/13/11 at 12:39 pm to Cold Cous Cous
That assumes it is a zero sum game, which clearly and unequivocally it is not!
Posted on 4/13/11 at 12:41 pm to Cold Cous Cous
quote:
But one rents and one pays a mortgage note. The renter will pay a higher percentage of his income in income taxes for no other reason than he is a renter. One guy pays more taxes so the other guy can pay less.
It's amazing how geared the entire tax and regulatory apparatus is to real estate investors.
Posted on 4/13/11 at 12:44 pm to Shankopotomus
It boils down to this: for most people the difference between a "loophole" and a "legitimate deduction" is whether they, personally, get to write it off.
Posted on 4/13/11 at 12:46 pm to Cold Cous Cous
This thread could evolve nicely into how much do we think the tax code should be changed/altered/obliterated?
The en vogue example is GE receiving billions in tax REFUNDs from the IRS rather than actually paying the United States income taxes on their profits...how the frick is that even possible? Oh yeah, lobbyists and CEOs who can call the Prez on his blackberry for a quick tax incentive program on their newest product....but I digress. Or do i?
The en vogue example is GE receiving billions in tax REFUNDs from the IRS rather than actually paying the United States income taxes on their profits...how the frick is that even possible? Oh yeah, lobbyists and CEOs who can call the Prez on his blackberry for a quick tax incentive program on their newest product....but I digress. Or do i?
Posted on 4/13/11 at 12:48 pm to Shankopotomus
quote:
The en vogue example is GE receiving billions in tax REFUNDs from the IRS rather than actually paying the United States income taxes on their profits...how the frick is that even possible? Oh yeah, lobbyists and CEOs who can call the Prez on his blackberry for a quick tax incentive program on their newest product....but I digress. Or do i?
That's not what really happened.
Posted on 4/13/11 at 12:48 pm to Cold Cous Cous
quote:
It boils down to this: for most people the difference between a "loophole" and a "legitimate deduction" is whether they, personally, get to write it off.
correct
Posted on 4/13/11 at 12:50 pm to Tiger JJ
quote:
lobbyists and CEOs who can call the Prez on his blackberry for a quick tax incentive program on their newest product.
quote:
That's not what really happened.
Sure you'd say that ... now you're one of them
Posted on 4/13/11 at 12:52 pm to Tiger JJ
I don't know the full history on the interest deduction, but wasn't it put in place to encourage home ownership?
CCC, the real injustice from your point of view comes in the comparison of you and your property owner. He/she is in all likelihood showing a tax loss on your home, while you pay the property taxes, insurance and house note - all factored into your rent - and get no deduction at all.
CCC, the real injustice from your point of view comes in the comparison of you and your property owner. He/she is in all likelihood showing a tax loss on your home, while you pay the property taxes, insurance and house note - all factored into your rent - and get no deduction at all.
Posted on 4/13/11 at 12:53 pm to LSURussian
quote:
Yes. It's inevitable, IMO.
I think there will be a phase in period, such as 90% deduction the first year, 80% the next year, and so on.
Rather than a phase-out, I think it's more likely that they'll grandfather-in those who took out their mortgage by a certain date -- most likely the date that the piece of legislation is drafted.
Before that, however, I think they'll lower the amount of indebtedness you can deduct upon. Right now, it's $1 million. They'll probably reduce it to $250-500K. It makes for better class-warfare politics to do it this way.
ETA: Probably the first thing they'll do is get rid of the deduction for home equity loans (currently up to $100K of indebtedness).
This post was edited on 4/13/11 at 1:00 pm
Posted on 4/13/11 at 12:55 pm to Newbomb Turk
quote:
They'll probably reduce it to $250-500K. It makes for better class-warfare politics to do it this way.
My thoughts as well, although I feel for those in expensive markets, as they will get the shaft.
Posted on 4/13/11 at 12:55 pm to Cold Cous Cous
quote:
The impression I get is that homeowners "feel" that the mortgage interest deduction saves them a lot more money than it actually does.
Perhaps in their mind. However, it does save them a lot more than just the interest deduction because it's typically the item that allows them to itemize in the first place. This opens up all sorts of other itemized deductions that literally saves them 25%-35% (for the typical homeowner) for each dollar they donate, or pay for taxes, etc.
Posted on 4/13/11 at 1:10 pm to Newbomb Turk
quote:
Perhaps in their mind. However, it does save them a lot more than just the interest deduction because it's typically the item that allows them to itemize in the first place. This opens up all sorts of other itemized deductions that literally saves them 25%-35% (for the typical homeowner) for each dollar they donate, or pay for taxes, etc.
Isn't charitable giving a separate line on the 1040 that is not itemized?
Posted on 4/13/11 at 1:13 pm to Tiger JJ
quote:
Isn't charitable giving a separate line on the 1040 that is not itemized?
No, it is itemized. His point is a good one and one that has been made many times.
Posted on 4/13/11 at 1:15 pm to Tiger JJ
Sch. A, Line 16-19
I was going to throw in Medical expense, but given that they have to be in excess of 7.5% of AGI, you would have to have some major unreimbursed medical expenses to qualify for the deduction.
I was going to throw in Medical expense, but given that they have to be in excess of 7.5% of AGI, you would have to have some major unreimbursed medical expenses to qualify for the deduction.
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