patrick.net

 
  forgot password?   register

#housing #investing #politics more»
736,525 comments in 75,767 posts by 10,912 registered users, 2 online now: Logan Mohtashami, Strategist

new post

Mortgage interest deduction benefits realtors and rich, not middle class

By tovarichpeter   2012 Nov 29, 7:46am   1 link   3,911 views   15 comments   watch (2)   quote      

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...

#housing

Comments 1-15 of 15     Last »

1   C Boy     2012 Nov 29, 10:04pm  ↑ like   ↓ dislike   quote    

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

A lot of flyover country does not really benefit.

2   Erikintx     2012 Nov 30, 1:22am  ↑ like   ↓ dislike   quote    

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.

3   C Boy     2012 Nov 30, 1:48am  ↑ like   ↓ dislike   quote    

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

Vacation homes should not qualify.

4   wave9x   1/1 = 100% civil   2012 Nov 30, 2:08am  ↑ like   ↓ dislike   quote    

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.

5   Erikintx     2012 Nov 30, 2:15am  ↑ like   ↓ dislike   quote    

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??)

6   wave9x   1/1 = 100% civil   2012 Nov 30, 2:55am  ↑ like   ↓ dislike   quote    

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.

7   Peter P   78/78 = 100% civil   2012 Nov 30, 8:10am  ↑ like   ↓ dislike   quote    

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.

8   Peter P   78/78 = 100% civil   2012 Nov 30, 8:12am  ↑ like   ↓ dislike   quote    

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.

9   iwog   1516/1517 = 99% civil   2012 Nov 30, 8:19am  ↑ like (3)   ↓ dislike   quote    

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.

10   Peter P   78/78 = 100% civil   2012 Nov 30, 8:22am  ↑ like (1)   ↓ dislike   quote    

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

11   Peter P   78/78 = 100% civil   2012 Nov 30, 8:25am  ↑ like   ↓ dislike   quote    

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.

12   iwog   1516/1517 = 99% civil   2012 Dec 1, 3:22am  ↑ like   ↓ dislike   quote    

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.

13   Bellingham Bill   72/72 = 100% civil   2012 Dec 1, 3:35am  ↑ like   ↓ dislike   quote    

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.

14   Bellingham Bill   72/72 = 100% civil   2012 Dec 1, 3:41am  ↑ like   ↓ dislike   quote    

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.

15   Bellingham Bill   72/72 = 100% civil   2012 Dec 1, 3:44am  ↑ like   ↓ dislike   quote    

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).

Comments 1-15 of 15     Last »

users   about   suggestions   contact  
topics   random post   best comments   comment jail  
patrick's 40 proposals  
10 reasons it's a terrible time to buy  
8 groups who lie about the housing market  
37 bogus arguments about housing  
get a free bumper sticker:

top   bottom   home