patrick.net

RentingForHalfTheCost says

SFace says

Interest is deductible for AMT 26%-28%. There is no AMT for state tax, another 10% benefit.

20k interest reduces tax by approx $7500

You're basically partially correct on everything which makes your conclusion/.analysis dangerous

There are other factors in my taxes that I'm really not comfortable posting on a public form. I make good money, lets just say that. And I have unusual circumstances. Not part of this topic.

i.e. If you have an adjusted gross income of over $166,800, your mortgage interest starts to get phased out.

Wouldn't it be nice to have a steady, slow growth economy rather than a speculation-based boom-and-bust bubble economy?

I guess Wall Street doesn't make any money without the latter. Gotta have those bubbles to keep the wealth flowing to the top.

wthrfrk80 says

Wouldn't it be nice to have a steady, slow growth economy rather than a speculation-based boom-and-bust bubble economy?

I guess Wall Street doesn't make any money without the latter. Gotta have those bubbles to keep the wealth flowing to the top.

I agree with you but it hasn't been that way for a very long time.

Greenspan and Bernanke were/are big fans of booms and busts. The people before them? Not so much - but here again our economy was different in those days. General Motors and Ford used to REALLY matter. Now they just matter.

When Google is six hundred bucks a share and they make a product you can't even hold in your hand, you know the world has changed. I don't know if I could even explain what Google is to most of the people who raised us.

Keep in mind that Volcker and Reagan set up the 1980-1982 recession to wring out all those inflationary pressures from the sixties and seventies so we could have twenty years of growth. I still say that's going to be the next big story: a change in our monetary policy.

RentingForHalfTheCost says

SFace says

Interest is deductible for AMT 26%-28%. There is no AMT for state tax, another 10% benefit. br />
20k interest reduces tax by approx $7500
You're basically partially correct on everything which makes your conclusion/.analysis dangerous

There are other factors in my taxes that I'm really not comfortable posting on a public form. I make good money, lets just say that. And I have unusual circumstances. Not part of this topic.
i.e If you have an adjusted gross income of over $166,800, your mortgage interest starts to get phased out.
http://www.fivecentnickel.com/2009/01/28/limits-on-itemized-income-tax-deductions/

You just need to understand the mechanics at a deeper level. Stop reading the headnotes and think a little harder. The worst kinds of opinions are someone who knows a little but represents a lot.

Itemized deduction phase-out went bye bye in 2010-2012 so the phase out does not exist currently. 2013 and beyond is yet to be determined.

To the extent there is a phase out going forward anyway, what is the impact anyway? The phase out starts at around 170K AGI. Say you have 470K in AGI, your phase out margin is 300K @ 2% or 6K of your itemized deduction is gone. If your interest and property tax increment from owning is 30K, you lost 6K and still retain 24K@. Tax bracket is a solid 33% or 35%, add in another 9.8% and state and there is around 10K in benefit, even with 470K in AGI and limitations on itemized deduction.

In practice, you get a 6K phase out anyway with or without MID and property tax. If you make 470K in AGI, you're going to be hit with the 6K in itemized deduction phase out anyway as state tax alone would be around 40K. The 30K increment from paying MID and property tax is 100% gravy at around 40% or $12,000 reduction in income tax. It doesn't even matter if your AGI is 1M or whatever as the phase out will effect what you already itemized with or without MID and property tax. In practice, the phase out is a 2% surcharge. If your federal tax is 100K, then the phase out will take it to 102K. If you own a home and the extra deduction takes federal tax to 90K then the surcharge takes it to 92K. This is for regular tax.

As a stated earlier, MID is a deduction to taxable income for AMT purpose as well at around 35% fed and state. Propety tax is around 10% fed and state.

Once you understand the mechanics of the regular tax and the AMT, high income owner who pays mortgage interest and property tax gets anywhere from 30%-35% (in the case of AMT) to 35-40% (in the case of regular tax) benefit. regardless, there is no exception to this. This is for CA income tax rates.

rootvg says

Greenspan and Bernanke were/are big fans of booms and busts.

I think you're right. Because who benefits from booms and busts? People who play the markets short-term. A.k.a. the financial sector.

At least the Robber Barons of the Gilded Age owned businesses that produced real wealth: steel, oil, railroads, etc. What does JP Morgan Chase produce?

Hell, GE is mainly a bank these days. Manufacturing is secondary.

rootvg says

Keep in mind that Volcker and Reagan set up the 1980-1982 recession to wring out all those inflationary pressures from the sixties and seventies so we could have twenty years of growth. I still say that's going to be the next big story: a change in our monetary policy.

I certainly hope so. Except now we have a huge amount of public and private debt that needs to be inflated away (at the expense of savers).

wthrfrk80 says

rootvg says

Keep in mind that Volcker and Reagan set up the 1980-1982 recession to wring out all those inflationary pressures from the sixties and seventies so we could have twenty years of growth. I still say that's going to be the next big story: a change in our monetary policy.

I certainly hope so. Except now we have a huge amount of public and private debt that needs to be inflated away (at the expense of savers).

We will. America will do the right things when all other (wrong) options are exhausted.

Mobi says

We will. America will do the right things when all other (wrong) options are exhausted.

I think Churchill was right on that.

SFace says

Itemized deduction phase-out went bye bye in 2010-2012 so the phase out does not exist currently. 2013 and beyond is yet to be determined.

Thanks SFace, I didn't realize it changed in the tax system. I owned a home in 2003-2006 and ran the numbers on my taxes didn't see much benefit. Good to know that if and when I decide to reenter the market I have that benefit now. If it will still exist at that time. ;)

Thanks for the details, that really helps. My issue in 2003-2006 was I had large AGI and a very low rate (4.5%) on a small (250K) balance, so the mortgage deduction was pretty minor to me.

rootvg says

wthrfrk80 says

thomas.wong1986 says

They will continue with this nonsense crap and it wont end..

Next time a realtor say,,, home prices are going up.. tell them "so will my foot... right up your ass."

Love it!

I don't think they're going up but where we bought they're definitely holding. The house down the street is pending after one week on the market. It's a REO that smells like mold, needs completely gutted to the rafters and the bank wanted in the high sevens for it. I wouldn't want it under any circumstances. It should be torn down.

rootvg says

wthrfrk80 says

thomas.wong1986 says

They will continue with this nonsense crap and it wont end..

Next time a realtor say,,, home prices are going up.. tell them "so will my foot... right up your ass."

Love it!

I don't think they're going up but where we bought they're definitely holding. The house down the street is pending after one week on the market. It's a REO that smells like mold, needs completely gutted to the rafters and the bank wanted in the high sevens for it. I wouldn't want it under any circumstances. It should be torn down.

Where are you living? Prices in the Danville/Alamo area that I live in are 33% off of the 2006 price. I am referring to regular and not short sales or REOs. A couple of moldy dumps have been sitting on the market with no takers. Aggresively priced places especially westside Danville and Alamo are going fast, but they are priced way below 2006. But if you mean that they bottomed already it may be the case, I just wonder if the increased short sales and REOs coming on the market in our area will have an effect and nudge things down another notch to reach our true local bottom.

pedrobenson says

Aggresively priced places especially westside Danville and Alamo are going fast, but they are priced way below 2006. But if you mean that they bottomed already it may be the case, I just wonder if the increased short sales and REOs coming on the market in our area will have an effect and nudge things down another notch to reach our true local bottom

They need to be way way below 2000 prices... we were already chin deep in a bubble by 2000.

Since 2008 rents in bay area apartment complexes are up around 50% from what I can tell.

My studio went from 800 to 1230
My friends 2BR in archstone went from 1700 to 2500

And its not even the peak summer season when the tech interns drive up rates..