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Mortgage interest deduction benefits realtors and rich, not middle class


By tovarichpeter   Follow   Thu, 29 Nov 2012, 7:46am PST   1,836 views   15 comments
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http://www.huffingtonpost.com/ben-hallman/mortgage-interest-deduction_b_2213304.html

As Washington searches for ways to drum up tax revenues in a bid to avert the fiscal cliff, the interest deduction some homeowners claim on their mortgages may be on the chopping block. The possibility that this deduction might go away has prompted the sort of dire warnings that might be reserved for news that the American flag will lose its stars and stripes: The housing market, finally recovering from a long decline, will plunge anew as values fall. People won't buy as many homes. Middle-class families will suffer and despair. But this view, voiced with the most conviction by...

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C Boy   Thu, 29 Nov 2012, 10:04pm PST   Share   Quote   Permalink   Like   Dislike     Comment 1

If your married you need to finance ~$200k to benefit vs the standard deduction.

A lot of flyover country does not really benefit.

Erikintx   Fri, 30 Nov 2012, 1:22am PST   Share   Quote   Permalink   Like   Dislike     Comment 2

I'm out in Abilene, TX but did live in CA at one point. We had a $600,000 or so mortgage and the interest deduction did matter. Remember we're also at historically low interest rates and when rates go up so will the mortgage interest (some people still take adjustable loans out, and HELOCs are adjustable).

I do think it should be income based and capped. For instance you can only deduct it against W-2 income so the WalMart kids and Buffet won't get to offset their dividend income. If you don't EARN money by working then you can afford to lose the deduction. This could be fazed in over 10 years (10%/year starting in 2014). That'll give them a full year or so to pay off/down the mortgage or adjust their finances. It'll also faze in the impact to the high end real estate market. Those bastard hedge fund managers with their "carried interest" BS tax break wouldn't get to write off their mortgage interest.

I'd argue for full tax deduction for families making W-2 income of $250K or less, with an adjustment upward on the $250K multiplier for high-expense/income counties. Or even double that to $500,000/couple of W-2 income to take full deduction. We never make even close to the $250K when living in CA so a full deduction still covers a SFR in Campbell, CA.

For those fortunate to make W-2 income of $250K/year (or even make it $500K/year) as a couple I think proper budgeting will allow even the affordability of Palo Alto, SF, NYC, etc.

C Boy   Fri, 30 Nov 2012, 1:48am PST   Share   Quote   Permalink   Like   Dislike     Comment 3

I also think the MID should apply to primary residences only.

Vacation homes should not qualify.

wave9x   Fri, 30 Nov 2012, 2:08am PST   Share   Quote   Permalink   Like   Dislike     Comment 4

I think the federal government should get rid of capital gains and make it part of income (like CA does for income tax), and keep the mortgage deduction for primary residences only. Getting rid of the deduction would hit the middle class and upper middle class the hardest, especially in the Northeast and West Coast. The really rich really wouldn't be affected that much.

Erikintx   Fri, 30 Nov 2012, 2:15am PST   Share   Quote   Permalink   Like   Dislike     Comment 5

The really rich like Buffet and hedge fund managers making hundreds of millions per year get the low 15% dividends (scheduled to go to 20%) rate. I think that's a better fat cat target than the capital gains tax (isn't that supposed to go to earned income rate if the scheduled law expirations happen??)

wave9x   Fri, 30 Nov 2012, 2:55am PST   Share   Quote   Permalink   Like   Dislike     Comment 6

I say both dividends and capital gains should be considered income. Many on this forum say you should put your money into stocks rather than a house, but the stock market is also propped up with sweet tax incentives and is 10x more corrupt and manipulated.

Peter P   Fri, 30 Nov 2012, 8:10am PST   Share   Quote   Permalink   Like   Dislike     Comment 7

You can label poor people "middle class" all day long.

250K is not even upper middle-class.

250K will barely rent you a nice yacht for one week.

The reality distortion field nowadays is simply astonishing.

When people stop aspiring to be successful and want only the fruits right now, we have a big problem.

Peter P   Fri, 30 Nov 2012, 8:12am PST   Share   Quote   Permalink   Like   Dislike     Comment 8

I thought mortgage deduction is limited to $1M?

What kind of rich men (other than Warren Buffett) will live in a $1M home?

Regardless of location, a rich man's kitchen alone costs way more than $250K nowadays.

iwog   Fri, 30 Nov 2012, 8:19am PST   Share   Quote   Permalink   Like (3)   Dislike     Comment 9

The mortgage interest deduction is a middle-class tax cut.

Eliminating it will not affect the 1% at all. They will simply roll all their property into an investment corporation and deduct the interest anyway.

I understand the argument used by those who want to eliminate it, citing lower real estate values as a benefit, however I don't agree with it and I think the aristocracy is going to ultimately set prices regardless of how taxes are handled.

Peter P   Fri, 30 Nov 2012, 8:22am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 10

When the remaining 99% stops wanting to be the top 1%, the society can only go to hell.

Peter P   Fri, 30 Nov 2012, 8:25am PST   Share   Quote   Permalink   Like   Dislike     Comment 11

Any tax policy will NEVER affect the rich because they control policies and there will always be some well-designed loop holes.

Progressive taxation only hurts those who try.

iwog   Sat, 1 Dec 2012, 3:22am PST   Share   Quote   Permalink   Like   Dislike     Comment 12

Peter P says

Any tax policy will NEVER affect the rich because they control policies and there will always be some well-designed loop holes.

Progressive taxation only hurts those who try.

FDR succeeded and Democrats would succeed if given sufficient support at the polls.

Bellingham Bill   Sat, 1 Dec 2012, 3:35am PST   Share   Quote   Permalink   Like   Dislike     Comment 13

Peter P says

When the remaining 99% stops wanting to be the top 1%, the society can only go to hell.

This is just your ideology defending the indefensible.

The 1% largely do not make their wealth via actual wealth-creation, they make it like iwog, buying up existing wealth and selling access to it.

To argue that we all must be parasites for our system to survive is in indictment of our system, not a defense of it.

Things ARE going to get worse here as we move away from defending the middle class and below from the predations of the wealthy.

Bellingham Bill   Sat, 1 Dec 2012, 3:41am PST   Share   Quote   Permalink   Like   Dislike     Comment 14

Peter P says

Progressive taxation only hurts those who try.

LOL, Sweden, Norway, Germany are not "hurt" by their tax structures.

Now, a flat tax on all incomes would be an interesting experiment. If we did not rebalance the wealth flows with government redistributive spending, the 90% who pay various rents to the 10% would eventually have no means at all and the current price structure would collapse.

That would be an interesting situation to see.

But people who cannot see where this is all going really trouble me, in that they are either being dishonest here (and just bullshitting for fun or profit) . . . or simply fucked in the head.

Bellingham Bill   Sat, 1 Dec 2012, 3:44am PST   Share   Quote   Permalink   Like   Dislike     Comment 15

iwog says

They will simply roll all their property into an investment corporation and deduct the interest anyway.

the fix for that is making interest not deductible for any land purchase.

if I were King interest would be deductible for the actual capital investment (bricks & sticks).

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