Atlanta Top Example in "The steep costs of living so far apart from each other" -Washington Post (to rent, credit)

[jsvh]

Sure you could build a single family home in the middle of downtown and take a deduction. But that is not really reasonable.

The the fact is renting and condominiums (where your HOA fees help maintain the building) make much more sense in an urban setting.

You can take advantage of subsidies for cars in the city too, but reality is they are a much bigger competent of suburban life.

And 2007 is just one example of why government should not be artificially driving people towards home ownership. People should have a fair choice between renting and owning just like they should have a fair choice between where they live.

[evannole]

Those are all fair opinions. But the fact remains, the mortgage interest deduction applies everywhere: houses in the suburbs, bungalows in Grant Park, condos in the glitzy Midtown high rises. Owner occupants of all of them get to claim it.

You seem to imply that the deduction is only for the suburbs, because the bulk of homeowners are in the suburbs, and thus it must be a conspiracy against city dwellers. Is it a subsidy for homeowners? Yes, of course. Is it an indirect subsidy to the construction and real estate industries? Yes. But at the end of the day, it is deployed wherever the demand is. In the past, there hasn't been much demand for central city housing in Atlanta. Lately, we have seen a significant increase in demand for housing in the city, and the suppliers have responded. I think this is a good thing. And make no mistake that the new owners of these properties will take their mortgage tax deduction, just like everyone else. To say that the deduction demonstrates a bias against the city and in favor of the suburbs because the bulk of the deductions have been taken outside of the city center is a classic example of post hoc, ergo propter hoc.

[bu2]

Originally Posted by jsvh

Do you deny that the mortgage deduction benefits single family home owners much more than apartment renters or condo buyers (HOA fees are not deductible)? Do you deny that single family homes are much more prevalent in the suburbs?

Do you deny that it benefits city dwellers in expensive neighborhoods more than suburban dwellers?

The same house/townhome/condo costs much more in the city.

[jsvh]

Originally Posted by bu2

Do you deny that it benefits city dwellers in expensive neighborhoods more than suburban dwellers?

I do not deny that the mortgage interest deduction benefits more expensive homes more. Another reason I am not a fan of it. People don't need tax breaks on mansions.

[toll_booth]

Originally Posted by evannole

To say that one way or the other is more "fair" is a sweeping judgement based on opinion rather than fact. I had a political science professor in college who called such statements "pre-criticism," and if you turned in a paper with any of it in it, he would circle it in red, write PC in the margin, and take several points off. So, I call PC here.

The desire for large houses is not entirely to blame for the lack of density, either. There's a way to have a large house on a small lot: it's called: "build it tall." My house is four stories, on a deliberately small lot, similar to how lots were sized 100 years ago or more, so we're quite close to our neighbors. Generally speaking, we like being close to our neighbors; the whole neighborhood is laid out in a similar fashion, and with front porches, back decks and lots of common green space, it has been remarkably easy to get to know everyone. We have more good friends in our new neighborhood after just 6 months than we had in the old one, where I was for 15 years and which was comprised of attached townhomes with very little usable outdoor space for each unit. Yet we still achieved our wish for a much larger, detached house in a much more walkable area. And, guess what, it's in (an urban part of) a suburb.

Which reminds me--that is the thing I like the most about gentrification. Most of it hits that density "sweet spot" of about 5-6 stories high. Many of the cities mentioned as being much less-sprawled, such as those in Europe, are like this all over the place. Paris, for instance, has very few skyscrapers, and instead it is a city full of medium-density dwellings and businesses. And yet look at their density.

Originally Posted by jsvh

ATL Urbanist highlighted some additional charts related to this article: The cost of our sprawling lifestyle in Metro...

Here is another slice showing how Atlanta is at the extreme:


And a great view showing how things like mortgage interest deduction are subsidizing the suburbs:

Whoa.

Congrats, this thread has caused me to rethink my support of the mortgage tax deduction. Well done.

Originally Posted by AnsleyPark

Mortgage interest deductions don't discriminate - it subsidizes the urban core, too.

Uh. How many single-family dwellings are being built in Midtown and downtown vs. Forsyth County?

[jsvh]

Originally Posted by evannole

Those are all fair opinions. But the fact remains, the mortgage interest deduction applies everywhere: houses in the suburbs, bungalows in Grant Park, condos in the glitzy Midtown high rises. Owner occupants of all of them get to claim it.

But that is my point. It does not apply everywhere. Want to live in Skyhouse? No deduction.

[arjay57]

A recent article that focuses mainly on the ATL.

The comments are interesting and, in my opinion, they show some of the bias and naievete that the rest of the country still has about the Deep south.

Why Americans Live Farther From Work Than They Did a Decade Ago

[Gulch]

Originally Posted by jsvh

But that is my point. It does not apply everywhere. Want to live in Skyhouse? No deduction.

Yet you can go about 50 feet to the northwest with Viewpoint and get the deduction.

[jsvh]

Originally Posted by Gulch

Yet you can go about 50 feet to the northwest with Viewpoint and get the deduction.

But if I want a newer building and a roof top pool instead of one on the 10th floor then I get no deduction. Point is, regardless of your reasons for preferring one place over another you cannot get the deduction everywhere and the data is very clearly that it is not utilized as much in urban areas as suburban areas.

[evannole]

Originally Posted by jsvh

But that is my point. It does not apply everywhere. Want to live in Skyhouse? No deduction.

It applies everywhere that there is owner occupied housing. It was never intended to help renters.

By the way, you do realize that the owners of Skyhouse, or any other apartment building, claim all kinds of tax deductions, don't you? They can, and do, deduct the cost of the paper they print your lease on, for goodness sake. They may not pass the savings on to the renters... But then again, some may, which is probably one reason that rent is typically cheaper than the combination of a monthly mortgage and associated home ownership costs, most of which are NOT tax deductible, on an equivalent home. I know that when I went from a rented apartment to my own townhouse many years ago, my monthly expenses went up quite significantly, and suddenly I was on the hook for maintenance, too. The overall quality of housing wasn't that different, really, but the independence, ability to do as I pleased with the interior and the knowledge that I was accumulating equity made it very worthwhile.

I do agree that there should be a cap on the size of the deduction that can be taken. As it turns out, there is, and I didn't know it until just now: only the first $1M in debt incurred in a purchase is eligible for the deduction. Subsidizing mansions should indeed not be the goal, and perhaps that cap should be even lower, especially in relatively low cost areas. As for the idea of getting rid of it altogether, especially all at once... Well, if you think the 2008 recession was bad...