patrick.net

Suggested this to Trump:

https://x.com/patrickdotnet/status/2009377595310158064

Like he listens to me. But still worth a shot.

A first home that in this market they will lose within 5 years.

The idea is that they hold onto it, so the price swings will be irrelevant.

If they fail to make payments, it could be a problem though. House would get sold at auction, and there might be nothing left after paying off the debt.

Patrick says

allow tax-free 401(k)/IRA withdrawals by married couples to spend on their first house

That will raise prices of first homes. A minimum 20% down on loans would bring prices back to actual affordability.

A few loopholes come to mind:

HELOCs: spend the equity now tax free, pay back with tax deferred money later. Triple dipping !!!

Under the table rental incomes: say a few rooms or some extra spaces.

Business deductions if any.

Why don't you just leave California instead?

You should have seen his housing announcement today. Prices will be going up.

He’s a builder, his friends are builders. Their business lives on asset inflation.

What Trump proposed is good; Wall Street was pooling gazillions of dollars and buying up single family houses all over the place.
How would you like to be bidding for a house against BlackRock?

I support Patrick's idea but I don't think people feel any sympathy for retired Americans; on the contrary we're resented.

HeadSet says

That will raise prices of first homes. A minimum 20% down on loans would bring prices back to actual affordability.

Do both. Let people take tax-free withdrawals from 401(k) to put into the 20% downpayment.

Yes, it would put more upward pressure on those starter houses, but would that increase totally negate the benefit of tax-free IRA withdrawls to people who want to buy a first house? I don't know.

Booger says

Why don't you just leave California instead?

Been here since 1997, so most people I know are here.

It's kinda hard to go somewhere new where you don't know anyone.

floki says

HELOCs: spend the equity now tax free

Let's say it's forbidden to borrow against the money you took out of the 401(k).

Though actually, it's already legal to borrow $50K against your 401(k) if your plan administrator agrees to allow it.

floki says

Under the table rental incomes: say a few rooms or some extra spaces.

I don't have a problem with that. If couples want to help offset the cost of owning by renting out a room, God bless them - as long as that house is the couple's sole residence.

It's already legal to buy a rental house with your 401(k) or other IRA. But the IRS says that you cannot live in it. That's what I want to change.

Patrick says

it's already legal to borrow $50K against your 401(k)

Or how about this idea: allow unlimited borrowing against your 401(k) to buy a first house. Then the interest payments literally go back into your 401(k).

If they wanted affordability they’d remove 30 year government backed mortgages. But they are in business of inflation.

Entire system is just inflation. Markets doubled last 5 years, it’s all inflation. And most Americans like boiling frogs watch it and accept it as normal.

Patrick says

The idea is that they hold onto it, so the price swings will be irrelevant.

No I mean a 500K+ mortgage for your average middle class family working at the company store, is a hard mortgage to see to term.

FortWayneHatesRealtors says

Markets doubled last 5 years, it’s all inflation.

Note that this pushes people into higher tax brackets, increasing government revenue.

So government directly benefits from inflation. The people lose.

This is why we need real metal silver by weight as currency, not "dollars" or other bullshit that can be redefined to be a smaller weight of silver.

Call it "The Pound" and make it literally one pound of pure silver. Inflation would end overnight, and the people would have the power to preserve their earnings.

Patrick says

Patrick says

it's already legal to borrow $50K against your 401(k)

Or how about this idea: allow unlimited borrowing against your 401(k) to buy a first house. Then the interest payments literally go back into your 401(k).

Right but the availability of that 50K loan is up to the plan (you already said that), is to be paid back to yourself with POST tax income, and only as long as you're with the same employer. Note the double taxation, I'll get back to that.

The HELOCs would be similar to that 50K loan, as in borrowing against your funds except now against the home, but the payments go to the note holder instead of to the owner, while it's spent by the owner, tax free. The gov will need a way to track those notes and payments somehow so can be taxed in the future.

Same for under the table rental incomes, which not only is being made tax free but on a property paid for by tax deferred financing.

The big issue here how the deferred taxes in an IRA are managed so they can be collected in the future. That is the reason for not allowing living in an investment property bought with IRA money because it's being spent tax free by living in it.

For the unlimited loan method, as it is today, if the payments are made with post tax money, and taxed at distribution, the double taxation could make it a very expensive mortgage. Also, another big issue to me is refinancing. You will not be able to enjoy potentially cheap market rates since the loan is funded by yourself.

floki says

HELOCs: spend the equity now tax free

You cannot "spend equity" unless you sell. You did not pull equity just because the house was collateral; you merely got a loan that must be paid back with interest and likely had closing costs. No different that claiming a "tax free signature loan" or claiming "unused wallet equity" with the remaining balance on your credit cards. Loans are always "tax free."

HeadSet says

floki says

HELOCs: spend the equity now tax free

You cannot "spend equity" unless you sell. You did not pull equity just because the house was collateral; you merely got a loan that must be paid back with interest and likely had closing costs. No different that claiming a "tax free signature loan" or claiming "unused wallet equity" with the remaining balance on your credit cards. Loans are always "tax free."

Hmm, HeadSet, signing up for HELOC(s) does not require selling or refinancing as long as total loan to value ratio is up to about 75-80%, which is the equity in question. I'm in CA so I don't know if it's different elsewhere. And the holder of that credit line becomes secondary lienholder of that property,
as you say.

My point about it being tax free is, that credit line (the borrowed equity) is not taxed, i.e it is not an income but it is still money to be spent. Yes, it is a debt collateralized by the home that must be repaid with interests of course.

Even better would be cashout refinance plus HELOCs, all tax free! During bull market conditions people made a killing flipping with this strategy, especially in CA because of crazy amount of equity.

So we can add cash out as another possible loophole to IRA financed property.

Patrick says

FortWayneHatesRealtors says

Markets doubled last 5 years, it’s all inflation.

Note that this pushes people into higher tax brackets, increasing government revenue.

So government directly benefits from inflation. The people lose.

This is why we need real metal silver by weight as currency, not "dollars" or other bullshit that can be redefined to be a smaller weight of silver.

Call it "The Pound" and make it literally one pound of pure silver. Inflation would end overnight, and the people would have the power to preserve their earnings.

That’s what convention of states is for. To force balanced budgets. They print away inflation, Trump does too. It’s insanity.

If the stock market rise is "all inflation", then your only defense against inflation is investing in the stock market.

But, I'm wondering just how the rise in price of a dozen eggs hurts me while my net worth rose millions in 5 years?