Obama Panel Eyes killing Mortgage Tax Breaks

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Aug 23, 2000
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If the US is EVER going to balance a national budget then reign in on spending and tax cuts that go into savings anyway.

Mortage interest deduction is something that doesn't benefit the economy at all and keeps money out of the system all together, it's not a good deal, not by anyones measures.

Everyone one of you people that say they should get rid of it are obviously not home owners.

This is the plan of the current admin. turn people against eachother. Eliminate home ownership, thus forcing people to live in apartments or rental and thus not actually owning anything, IE driving down net worth, IE destroying wealth.
You want to kill the economy, take away one of the biggest advantages to becoming a home owner. Kill the builders, the lenders, the workers, and eliminate taxes that local governments can make on the land/houses.
 
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zsdersw

Lifer
Oct 29, 2003
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Everyone one of you people that say they should get rid of it are obviously not home owners.

This is the plan of the current admin. turn people against eachother. Eliminate home ownership, thus forcing people to live in apartments or rental and thus now actually owning anything, IE driving down net worth, IE destroying wealth.
You want to kill the economy, take away one of the biggest advantages to becoming a home owner. Kill the builders, the lenders, the workers, and eliminate taxes that local governments can make on the land/houses.

Gee, no hyperbole there. :rolleyes:
 

sandorski

No Lifer
Oct 10, 1999
70,225
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Fail.

"I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes."
- President Obama

Ahh, indeed I did.
 

zsdersw

Lifer
Oct 29, 2003
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I'll say it again... many people who are relatively new to owning their home probably shouldn't, especially if they lost their job and cannot find one that will make ends meet within a reasonable radius, or if they're in a line of work that's not long for this country.

There are other ways to build financial value and personal worth than home ownership.
 
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werepossum

Elite Member
Jul 10, 2006
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I'll say it again... many people who are relatively new to owning their home probably shouldn't, especially if they lost their job and cannot find one that will make ends meet within a reasonable radius, or if they're in a line of work that's not long for this country.

There are other ways to build financial value and personal worth than home ownership.

Earning and owning your own home used to be the American dream. Now it appears that not only are we expected to fund this dream for others, but we should also give it up for ourselves. This is progress how again?
 

ElFenix

Elite Member
Super Moderator
Mar 20, 2000
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Rent is not a subsidy. It is considered Income and therefore subject to Taxation. If you are collecting rents and not paying taxes on what you collect, then you are breaking the law and the IRS can/will get you if/when they figure it out.
i think you missed it...

2 people with identical incomes at identical jobs. one rents a 1,500 sq foot place. the other buys a 1,500 sq foot place. same neighborhood. who potentially gets a tax break? there's the subsidy.
 

thraashman

Lifer
Apr 10, 2000
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Fail.

"I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes."
- President Obama

So, I'm lost. Are Republicans faulting Obama for keeping his campaign promise? He hasn't raised taxed for those people. He's actually lowered taxes for 95% of Americans. The bipartisan commission hasn't made a single recommendation yet, they're simply being thorough enough to examine all avenues. No policy has been even considered, let alone implemented that would end mortgage tax breaks.

So what I think I'm saying here is that the conservatives are either liars or morons. Because they aren't even coming close to speaking the truth and it heavily appears they simply don't even understand it.

Anyone else read about the study that showed if someone believes a lie and you present irrefutably the truth to them, that conservatives are significantly more likely than liberals to not only still refuse to accept the truth but to believe the lie even more strongly? Perhaps I should go find that.
 

kranky

Elite Member
Oct 9, 1999
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So what is the mortgage interest deduction really worth to a taxpayer?

Someone can check my math. I assumed $80K income, filing joint, buying a $200K home at 4%, 30 years.

Their standard deduction is $11,400. The mortgage interest in the first 12 months (best case scenario) is only about $8,000. Unless they have other deductions to itemize, it won't count for a thing.

If they have $5,000 in other itemizeable deductions, the mortgage interest would mean a total of $14,000 in itemized deductions. The difference between the $14,000 and the standard deduction is $2,600. They would save the income tax on $2,600 which is about $500-$600 a year.

So the mortgage interest deduction, assuming they DO have another $5,000 they can itemize, benefits them by about $50 a month.

Is $50 a month the difference between being able to buy a house or not? I don't think so. The people who would save a lot are the ones who have many other things they can itemize, but most people looking for a starter home don't have a ton of things to itemize. The people who really save money from deducting mortgage interest are the people with a lot of itemized deductions and a large mortgage. Their mortgage interest might be subsidized by 25% or more.

I am not in favor of removing the deductibility of mortgage interest but I think its benefits mainly accrue to the wealthy, and it does not make a huge difference in whether people just starting out can buy a home.
 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,589
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Incresed costs which are being driven by government policies are in effect a tax although hidden.

Over the next couple of years; those policies will start to go into effect against ones wallet.

Extra costs for Health care are the first.

Extra costs for paperwork to small business are also now in the works.

It is nickel & dime stuff; but it adds up when one is not looking. That is what the government is coiunting on happening. You will not feel their fingers in your pockets digging deeper.
 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,589
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So what is the mortgage interest deduction really worth to a taxpayer?

Someone can check my math. I assumed $80K income, filing joint, buying a $200K home at 4%, 30 years.

Their standard deduction is $11,400. The mortgage interest in the first 12 months (best case scenario) is only about $8,000. Unless they have other deductions to itemize, it won't count for a thing.

If they have $5,000 in other itemizeable deductions, the mortgage interest would mean a total of $14,000 in itemized deductions. The difference between the $14,000 and the standard deduction is $2,600. They would save the income tax on $2,600 which is about $500-$600 a year.

So the mortgage interest deduction, assuming they DO have another $5,000 they can itemize, benefits them by about $50 a month.

Is $50 a month the difference between being able to buy a house or not? I don't think so. The people who would save a lot are the ones who have many other things they can itemize, but most people looking for a starter home don't have a ton of things to itemize. The people who really save money from deducting mortgage interest are the people with a lot of itemized deductions and a large mortgage. Their mortgage interest might be subsidized by 25% or more.

I am not in favor of removing the deductibility of mortgage interest but I think its benefits mainly accrue to the wealthy, and it does not make a huge difference in whether people just starting out can buy a home.

Add in property taxes, state income tax/sales tax and you start to excess that threshhold.

Some also have business expenses and medical costs that impact that base number.
 

Fern

Elite Member
Sep 30, 2003
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The latter part depends on other factors which might not have been the case before.

The point remains. This is about increasing taxes where it hurts. Health care, home, things which working families pay for are targeted and for what? To spend yet more? There is a commission to take more, where is the one to spend less?

Exactly. This is not "tax reform", it's just a hunt for more revenue.

"My concern is that the talk of tax expenditures is couched as 'tax reform,' but it's not tax reform," said Alison Fraser, director of the Thomas A. Roe Institute for Economic Policy Studies at the conservative Heritage Foundation. "It's simply a revenue-raising exercise."


So, the HCR bill essentially mandates we all have HI. And HI will be made more expensive due to phase-out on such items as annual and lifetime caps etc. Then be made even more expensive by making us pay income tax on HC benefits etc. This makes sense to those on the Left?

The housing sector is already one of our biggest problem, requiring a lot of federal money for bailouts. Removing the home mortgage deduction now will likely be self-defeating. All estimates are that foreclosures will continue until well into 2011 when things may bottom out or stabilize. Are they trying to extend that further into the future?

----------------

How about a freeze on fed government hiring?

How about a freeze on fed government wages? Why do they get annual COLA raises when most people don't even have a job.

Judging by recent reports the Homeland Security has gron massively with much overlap and redundancies, how about a commission to review that with an objective to streamline and make more efficient?

The home mortgage deduction is allowed for second homes, how about eliminating that first?

How about getting rid of that damn 'loophole' for ultra high earning fund managers whereby they pay only 15% (LT cap gains rate) on their 'wages'?

How about a moritorium on foreign aid?

How about means-testing for SS and Medicare?

Fern
 

her209

No Lifer
Oct 11, 2000
56,336
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So what is the mortgage interest deduction really worth to a taxpayer?

Someone can check my math. I assumed $80K income, filing joint, buying a $200K home at 4%, 30 years.

Their standard deduction is $11,400. The mortgage interest in the first 12 months (best case scenario) is only about $8,000. Unless they have other deductions to itemize, it won't count for a thing.

If they have $5,000 in other itemizeable deductions, the mortgage interest would mean a total of $14,000 in itemized deductions. The difference between the $14,000 and the standard deduction is $2,600. They would save the income tax on $2,600 which is about $500-$600 a year.

So the mortgage interest deduction, assuming they DO have another $5,000 they can itemize, benefits them by about $50 a month.

Is $50 a month the difference between being able to buy a house or not? I don't think so. The people who would save a lot are the ones who have many other things they can itemize, but most people looking for a starter home don't have a ton of things to itemize. The people who really save money from deducting mortgage interest are the people with a lot of itemized deductions and a large mortgage. Their mortgage interest might be subsidized by 25% or more.

I am not in favor of removing the deductibility of mortgage interest but I think its benefits mainly accrue to the wealthy, and it does not make a huge difference in whether people just starting out can buy a home.
How did you get $14,000?
 
Nov 30, 2006
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So, I'm lost. Are Republicans faulting Obama for keeping his campaign promise? He hasn't raised taxed for those people. He's actually lowered taxes for 95% of Americans. The bipartisan commission hasn't made a single recommendation yet, they're simply being thorough enough to examine all avenues. No policy has been even considered, let alone implemented that would end mortgage tax breaks.

So what I think I'm saying here is that the conservatives are either liars or morons. Because they aren't even coming close to speaking the truth and it heavily appears they simply don't even understand it.

Anyone else read about the study that showed if someone believes a lie and you present irrefutably the truth to them, that conservatives are significantly more likely than liberals to not only still refuse to accept the truth but to believe the lie even more strongly? Perhaps I should go find that.
Promise broken. Who's the liar here? Who's the moron here?
http://politifact.com/truth-o-meter...ily-making-less-250000-will-see-any-form-tax/
 

ElFenix

Elite Member
Super Moderator
Mar 20, 2000
102,357
8,446
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Do you have data California is some big leader on this? It is on many issues, but this?
while there are some markets outside of CA that have experienced worse depreciation, CA is the the volume leader. further, there's a lot of evidence that so-cal'ers cashing out their houses and moving to vegas and phoenix, bringing their boom mentality with them, contributed to those bubbles (those are the worst two cities, in &#37; value terms). floriduh is probably worse (greater % of homes in foreclosure), but i'm not sure how it measures up in absolute value terms (real estate in CA is notoriously expensive, though miami has been ridiculous).

after 1991, CA experienced declines in value for 4 or 5 straight years. the declines were no where near as big (lost about 20% value overall), but literally CA had just been through declines 15 years ago so you get to the old botched dub saying of 'fool me twice, don't fool me again.'

If that were your only deduction. But things like state income tax are deductible, too.
right but all that stuff has to add up more than the standard deduction to break even. in places with lower state income taxes and lower housing values the average family may not meet it. especially if they've owned their home for several years.
 
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Fern

Elite Member
Sep 30, 2003
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There is one decent partial solution that actually has a hope of working. The real problem with the deduction as it stands is that it encourages over-borrowing, because the interest is what gets deducted. This is not so much a subsidy for buying a house as it is a subsidy for financing a house - and worse yet, keeping it financed.

If the mortgage interest deduction were replaced with a mortgage principal repayment deduction tuned to give a similar deduction amount, it would correct one of the perverse incentives that the current deduction creates, while making it a lot easier to sell to the voters. Granted, it would maintain a totally unnecessary subsidy, but its overall effect would be slightly better.

Big problem with that.

The "principal payment deduction" would be backloaded.

If you wanna get new/young people into homes you need to frontload the benefit so it actually helps with buying the home. They especially need the tax benefit when trying to buy their home. There's little to no pricipal payments (other than downpayment possibly) until 8-10 yrs. By then the new/young people could expect to be making more money and don't really need the tax benefit.

Fern
 

thraashman

Lifer
Apr 10, 2000
11,103
1,550
126

A tax on something that can easily be avoided by simply not doing the act is grasping at straws. If it had been on food, which is something everyone actually needs, I'd have given it to you.

And I should mention that my liars and morons statement was aimed at the thread topic specifically because of the people who are talking like something that is at most being looked at is something that has already been passed and implemented.
 
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ElFenix

Elite Member
Super Moderator
Mar 20, 2000
102,357
8,446
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Yes, give away more money to the mortgage lender so that you can get a portion of that back from the government. Awesome logic!

makes as much sense as subsidizing corn syrup and then taxing thin people for the fatties getting diet cokes with their big macs.
 

her209

No Lifer
Oct 11, 2000
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Big problem with that.

The "principal payment deduction" would be backloaded.

If you wanna get new/young people into homes you need to frontload the benefit so it actually helps with buying the home. They especially need the tax benefit when trying to buy their home. There's little to no pricipal payments (other than downpayment possibly) until 8-10 yrs. By then the new/young people could expect to be making more money and don't really need the tax benefit.

Fern
I remember back in 2005, co-workers were telling me how they could deduct their mortgage interest and they would pay no cap taxes on the first $250,000 if they lived there for 2 years. Its was a no-brainer for them to get a interest-only loan!

:D
 

nonlnear

Platinum Member
Jan 31, 2008
2,497
0
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Big problem with that.

The "principal payment deduction" would be backloaded.

If you wanna get new/young people into homes you need to frontload the benefit so it actually helps with buying the home. They especially need the tax benefit when trying to buy their home. There's little to no pricipal payments (other than downpayment possibly) until 8-10 yrs. By then the new/young people could expect to be making more money and don't really need the tax benefit.

Fern
I don't see that as a problem. The front-loading of the interest deduction is one of the big problems with it as it exists today. It encourages over-buying. A principal deduction wouldn't have to be back-loaded at all. After all, people can pay down their principal whenever they want to. This give s people a HUGE incentive to get into houses they can comfortably afford, with room in their budgets to pay it off quickly. The more room you have left in your budget, the more flexibility you have to reduce your tax liability.
 

Fern

Elite Member
Sep 30, 2003
26,907
173
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The deduction could be abolished for all new purchases while leaving grandfathered mortgages with deductible interest. (If this were to be done I'd like to see it sunset after about 5 years.) This way it wouldn't hurt anyone's ability to make their payment if that actually affected their personal solvency. (But frankly if that deduction was the difference between a person keeping their home and losing it, they bought too much house to begin with...)

And with what result?

It's gonna drive down the value of homes on the market (and thereby all homes).

How will this affect banks with properties in foreclosure? How will this affect the toxic assets? Who's holding those?

Why, again, did we bail them out? And would this change just be highly antithetical to the purpose/objective of the bailouts etc.?

How many billions did we spend on home buyer credits? Again, wouldn't this just be antithetical to that whole program?

I see no logic here, they're all over the place blowing money in self-defeating and contradictory ways. These people are economic dunderheads and look to be scrambling about in short-sighted mass confusion. These clowns are scary.

Note: I do not, nor have for a long time, benefit from the mort interest deduction. I brought my home many years ago with a 15 yrs mortgage.

Fern
 

werepossum

Elite Member
Jul 10, 2006
29,873
463
126
A tax on something that can easily be avoided by simply not doing the act is grasping at straws. If it had been on food, which is something everyone actually needs, I'd have given it to you.

And I should mention that my liars and morons statement was aimed at the thread topic specifically because of the people who are talking like something that is at most being looked at is something that has already been passed and implemented.

Typical leftist. You have no problem with the government deciding how you should live and then taxing you into that lifestyle. Tax on tobacco? No problem, don't use tobacco. Tax on tanning? No problem, don't go to tanning booths. Eliminate the mortgage deduction? No problem, just rent.

Note that none of these affect me in the slightest; I don't use tobacco or tanning booths, and my house is paid off. I do however have a big problem with government using tax law to force me into the behaviors it deems suitable. Which is why I so strongly support the FairTax. Want to use tobacco? Fine, pay the same tax as on anything else. Want to buy a house? Fine, buy it with the same tax as on anything else. The government needs to be out of the business of running our lives, especially through tax law. When it gives up subsidizing or penalizing other behaviors, then I'll be fine with giving up the mortgage deduction. Until then, this is nothing more than yet another proposal to raise taxes on the dog whilst rewarding the ticks.