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Started By
Message
If I rent a house why am I subsidizing your mortgage deduction
Posted on 5/24/18 at 1:41 pm
Posted on 5/24/18 at 1:41 pm
Wanted to throw this out there because I had a customer ask me this question this morning, and to be hones I really did not have a good answer for him.
Obviously under the tax code, having a mortgage allows you to deduct all of the interest paid, but this gentleman said that because he rents and he cannot deduct the rent, he is being penalized and feels that renters are subsidizing people who pay get to deduct the interest . For instance, if he makes 100K and rents, his tax bill is considerably more than the same guy who makes 100K and "owns" and pays a mortgage note. Also said his landlord feels very much the same way since he can't deduct on the interest on his rental properties
I asked why he does not own a house. His situation and job makes it as such that owning would be more of a problem since he has to move with his job an average every 2.5 years
What say the OT ers to his assertion?
Obviously under the tax code, having a mortgage allows you to deduct all of the interest paid, but this gentleman said that because he rents and he cannot deduct the rent, he is being penalized and feels that renters are subsidizing people who pay get to deduct the interest . For instance, if he makes 100K and rents, his tax bill is considerably more than the same guy who makes 100K and "owns" and pays a mortgage note. Also said his landlord feels very much the same way since he can't deduct on the interest on his rental properties
I asked why he does not own a house. His situation and job makes it as such that owning would be more of a problem since he has to move with his job an average every 2.5 years
What say the OT ers to his assertion?
49
Posted on 5/24/18 at 1:42 pm to KiwiHead
Tell him to stop being a poor and buy a fricking house.
Posted on 5/24/18 at 1:42 pm to KiwiHead
He is free to purchase a house if he pleases.
Posted on 5/24/18 at 1:42 pm to KiwiHead
If he doesnt like it he should buy something then
He doesnt have to pay property taxes or insurance (other than cheap renters insurance) either
He doesnt have to pay property taxes or insurance (other than cheap renters insurance) either
Posted on 5/24/18 at 1:42 pm to KiwiHead
He’s a dumbass
Posted on 5/24/18 at 1:42 pm to KiwiHead
Two easy answers:
1) because it is legal and things that are both legal and financially beneficial become common practice.
2) but the answer he will like better is that because without that incentive there would be a higher price on rent and fewer people buying properties for the purpose of renting them.
1) because it is legal and things that are both legal and financially beneficial become common practice.
2) but the answer he will like better is that because without that incentive there would be a higher price on rent and fewer people buying properties for the purpose of renting them.
Posted on 5/24/18 at 1:43 pm to KiwiHead
The OTs discussion of passive activity loss limitations should be enlightening.
Posted on 5/24/18 at 1:43 pm to KiwiHead
Well he’s right. I don’t know what you’re supposed to tell him though.
Posted on 5/24/18 at 1:44 pm to KiwiHead
quote:
he is being penalized and feels that renters are subsidizing people who pay get to deduct the interest
There's winners and losers of every deduction. That's the point, it incentivizes certain behavior.
quote:
For instance, if he makes 100K and rents, his tax bill is considerably more than the same guy who makes 100K and "owns" and pays a mortgage note
Not necessarily because it's an itemized deduction.
Eta: as a renter he also has no risk of ownership so he gets that over the owner.
This post was edited on 5/24/18 at 1:46 pm
Posted on 5/24/18 at 1:44 pm to KiwiHead
Is he paying interest on the rent? Is he paying his landlord's property tax?
Posted on 5/24/18 at 1:44 pm to molsusports
quote:
but the answer he will like better is that because without that incentive there would be a higher price on rent and fewer people buying properties for the purpose of renting them.
That's not a bad answer
Posted on 5/24/18 at 1:45 pm to KiwiHead
quote:
I asked why he does not own a house. His situation and job makes it as such that owning would be more of a problem since he has to move with his job an average every 2.5 years
I am in this same boat. It doesn't make sense to buy a house with a mortgage if I am just moving again in a few years.
Posted on 5/24/18 at 1:46 pm to KiwiHead
quote:wut?
Also said his landlord feels very much the same way since he can't deduct on the interest on his rental properties
Posted on 5/24/18 at 1:46 pm to KiwiHead
He's paying for the flexibility of being able to move with minimal strings attached and minimal liability. He's over thinking things. Tell him to hire a good accountant that he can pose these questions to and who can help him keep more of his money.
Posted on 5/24/18 at 1:46 pm to KiwiHead
quote:
What say the OT ers to his assertion?
tell him to shut the frick up cause he has assumed none of the risks of owning the home.
Posted on 5/24/18 at 1:47 pm to rowbear1922
Financial benefits of home ownership aren’t what they used to be
Posted on 5/24/18 at 1:47 pm to KiwiHead
If you don’t want to rent a house, buy one. That would be my response.
Posted on 5/24/18 at 1:48 pm to Cosmo
quote:
He doesnt have to pay property taxes or insurance (other than cheap renters insurance) either
Or put up with tenants that break leases, damage property or have to be evicted.
Posted on 5/24/18 at 1:48 pm to 777Tiger
quote:
Financial benefits of home ownership aren’t what they used to be
I just have no desire to buy a house that I will only be in 2-3 days a month after I move to my next project.
Posted on 5/24/18 at 1:49 pm to Tigerfan56
quote:
Well he’s right. I don’t know what you’re supposed to tell him though.
Tell him/her to pay extra for property taxes and insurance.
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