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Trump tax cut to cost many Bay Area homeowners 6-figures in mortgage deductions

By someone else following x   2018 Mar 7, 5:47pm 915 views   15 comments   watch   sfw   quote     share    


https://www.sfgate.com/news/article/Report-Seattle-homeowners-lose-big-under-Trump-12736223.php

Apartment List analyzed the impact for cities, counties and states across the U.S. and found that San Francisco area homeowners stand to see a median cut in deductions of $4,500 in the first year. That figure puts the San Francisco-Oakland metro region just behind San Jose-Sunnyvale area at $5,400, the biggest projected deduction loss among any region in the country.

Specifically, Trump's plan lowered the cap on mortgage interest deductions from $1 million to $750,000. What that means is that home buyers can deduct from their income the interest on their first $750,000 in home loans. Since buyers usually pay more interest up front, that can mean thousands of dollars in deductions each year. Over the term of a 30 year mortgage, that loss will amount to more than $100,000 for the median new homeowner in the San Jose area ($114,000) and San Francisco area ($109,00o), according to the report.


This is fantastic news! It is likely to bring down housing prices at least a little, making housing more affordable around here.

Bonus: no one but the banks actually benefits from such massive mortgages. Most buyers don't do math well enough to see that spending an extra dollar to get a 30 cent deduction is unwise, and so they think a big deduction is a good thing.
2   Ceffer   ignore (1)   2018 Mar 7, 6:19pm   ↑ like (2)   ↓ dislike (0)   quote        

Poor widdle California speculators.
3   Heraclitusstudent   ignore (1)   2018 Mar 7, 6:31pm   ↑ like (1)   ↓ dislike (0)   quote        

Lower deductions is 1 thing. There is also a lower tax rate.
4   SFace   ignore (0)   2018 Mar 7, 7:16pm   ↑ like (1)   ↓ dislike (0)   quote        

Good article but has no context.

1) There's no functional difference in deducting at 1M level of 750K. You take a 750K loan instead of 1M.
2) While trump tax cut may cost some small amount of deduction, the other area of trump tax cut will make it all up and more, namely tax bracket going down to 37%. The 33% tax bracket which started at 233K is now replaced with a 24% tax bracket at 165K and 32% at 315K. ETR down around 4% overall and 400K @ 4% = 16K. That's just for median earners, the rich will laugh at all the extra pay not taxed.
3) Most in SFBA already knows, SALT deduction is worthless with AMT. There's no real loss there as it was never deductible anyway. If you pay regular tax because you earn a million, then the tax bracket thing offset the loss of SALT anyway.

It's going to make the most expensive home more expensive. The more affordable homes will be less affordable for this who have to work/pay mortgage.

It's damn if you do and damn if you don't. Rents will go up, that's a certainty.
5   RafiMaas   ignore (0)   2018 Mar 7, 7:34pm   ↑ like (0)   ↓ dislike (0)   quote        

someone else says
for the median new homeowner in the San Jose area ($114,000) and San Francisco area ($109,00o), according to the report.


That's crazy , you'd think SF residents would be out more
6   bob2356   ignore (1)   2018 Mar 7, 8:26pm   ↑ like (1)   ↓ dislike (1)   quote        

someone else says

This is fantastic news! It is likely to bring down housing prices at least a little, making housing more affordable around here.


Making housing more affordable? Because of $4,500 a year for people that can afford a 750,000 house? ROFLOL.
7   Strategist   ignore (1)   2018 Mar 7, 8:39pm   ↑ like (0)   ↓ dislike (0)   quote        

bob2356 says
someone else says

This is fantastic news! It is likely to bring down housing prices at least a little, making housing more affordable around here.


Making housing more affordable? Because of $4,500 a year for people that can afford a 750,000 house? ROFLOL.


I actually agree with my friend Bob. If paying $100,000 more for a house makes no difference to them, $4,500 will make even less of a difference.
8   mell   ignore (1)   2018 Mar 7, 11:06pm   ↑ like (0)   ↓ dislike (0)   quote        

Strategist says
bob2356 says
someone else says

This is fantastic news! It is likely to bring down housing prices at least a little, making housing more affordable around here.


Making housing more affordable? Because of $4,500 a year for people that can afford a 750,000 house? ROFLOL.


I actually agree with my friend Bob. If paying $100,000 more for a house makes no difference to them, $4,500 will make even less of a difference.


The fiercest competition is at the lower segments which in SF are easily in this price range. It will make a difference, but if people don't think it will then why worry or be up in arms about it. It's yet another move in the right direction.
9   Tenpoundbass   ignore (11)   2018 Mar 8, 5:15am   ↑ like (1)   ↓ dislike (0)   quote        

That's fucking awesome, tax games shouldn't be used to keep housing ridiculously inflated and out of reach for the common man in America.
Homeownership is the American dream not the American scam.
Dump your over priced shack the Tedster is getting out of the homeownership subsidizing business. We've got a real president now.

Assholes!
10   WookieMan   ignore (0)   2018 Mar 8, 5:16am   ↑ like (1)   ↓ dislike (0)   quote        

someone else says
Apartment List analyzed the impact for cities, counties and states across the U.S. and found that San Francisco area homeowners stand to see a median cut in deductions of $4,500 in the first year. That figure puts the San Francisco-Oakland metro region just behind San Jose-Sunnyvale area at $5,400, the biggest projected deduction loss among any region in the country.



someone else says
Over the term of a 30 year mortgage, that loss will amount to more than $100,000 for the median new homeowner in the San Jose area ($114,000) and San Francisco area ($109,00o), according to the report.


Not sure how they're doing the math here. So because of the loan amount ($750k plus), the median cut in deduction would be $5,400 in Sunnyvale. That's just a reduction in taxable income. The typical home buyer stretches to what they can afford. They're usually not frugal. So most these people will be in the 24% federal tax bracket. That's $1,296/yr extra they would be taxed in a year.

Looks more like $39k roughly over 30 years assuming all variables are equal over that time, taking the median deduction loss in Sunnyvale. My math could be off or I'm forgetting something, so let me know if I'm wrong. but this article seems like click bait to me. Or the author literally doesn't know what a deduction is. $1,296 is like a quick weekend trip to Vegas with the guys. Most people in this income bracket aren't going to blink at the difference as Bob mentions.

Just wanted to visualize it and put some numbers to it. Feel free to show me my errors, as I did this pretty quickly. This doesn't change house prices one bit. Anywhere.
11   bob2356   ignore (1)   2018 Mar 8, 6:15am   ↑ like (0)   ↓ dislike (0)   quote        

Champion_Libtard_Catcher says
That's fucking awesome, tax games shouldn't be used to keep housing ridiculously inflated and out of reach for the common man in America.
Homeownership is the American dream not the American scam.
Dump your over priced shack the Tedster is getting out of the homeownership subsidizing business. We've got a real president now.


Just out of curiosity, where do you think a big chunk of the newly passed tax cut that our real president just signed is going to end up? Hint, it starts with the words real estate and ends with the word investment.
12   zzyzzx   ignore (1)   2018 Mar 8, 9:08am   ↑ like (4)   ↓ dislike (0)   quote        

Trump tax cut to cost many Bay Area homeowners 6-figures in mortgage deductions

13   Hassan_Rouhani   ignore (2)   2018 Mar 8, 9:09am   ↑ like (1)   ↓ dislike (0)   quote        

7 figures! No, 8 figures!!!
14   HEYYOU   ignore (13)   2018 Mar 8, 9:43am   ↑ like (0)   ↓ dislike (1)   quote        

MAGA!
If deductions are reduced,taxes go up?
Rhymes with tax increase?
15   Hircus   ignore (0)   2018 Mar 9, 2:17pm   ↑ like (0)   ↓ dislike (0)   quote        

WookieMan says
That's $1,296/yr extra they would be taxed in a year.


The average real-world impact might be even less when you consider the AMT - some were already in AMT territory and so got no (or reduced) benefit from the deduction anyway.




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