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Old 08-11-2012, 10:28 AM
 
Location: Nebraska
1,078 posts, read 938,339 times
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Could someone explain how the deduction makes housing affordable?
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Old 08-11-2012, 10:32 AM
 
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it actually doesnt make housing costs more affordable. having no mortgage ,no interest payments and no deduction makes monthly costs way less . but unless you have a paid for home ,the money to pay cash or someone gives it to you interest free a mortgage is the only way to do it.

it really is just a rebate of some of the expenses that are over and above the cost of the house.

it allows 2 of the most expensive aspects of buying, mortage interest and taxes to give you back about a buck for every 4 you pull out of pocket, assuming you are over the standard deduction. if your not then you dont get a penny back that you spent.

the truth is your better off not spending the money and giving up the deductions, then housing costs would be the lowest . but since most cant pay cash or dont want to give up opportunity costs elsewhere they need a mortgage with interest payments, taxes are part of life but its really no different then getting a rebate on any other bill you pay.

Last edited by mathjak107; 08-11-2012 at 10:40 AM..
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Old 08-11-2012, 11:09 AM
 
17,749 posts, read 15,029,293 times
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Quote:
Originally Posted by BJW50 View Post
Could someone explain how the deduction makes housing affordable?
It doesn't. It just raises the price and the money goes into the pocket of the seller.
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Old 08-11-2012, 12:50 PM
 
3,031 posts, read 2,863,759 times
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Quote:
Originally Posted by gwynedd1 View Post
It doesn't. It just raises the price and the money goes into the pocket of the seller.
So the seller would really be the one opposed because of the loss of equity if it lowers the cost of the house. I would also imagine the loss of commission for agents, plus, the higher the ticket on the house, the more property tax would be tax collected etc.

BTW, we didn't go for the house at the top of our price range... too scary, and I think agents always make things sound rosier than they are. We talked to an accountant who said you should never buy a house counting on the tax return, because sometimes its not as much as you thought it would be.
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Old 08-11-2012, 01:35 PM
 
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My rule of thumb is never count it.it vanishes more and more as you pay less and less interest and more and more principal.

You can trigger the amt tax and lose the real estate tax deduction.

You may be under the standard deduction amount and get no deduction.
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Old 08-11-2012, 01:41 PM
 
Location: NJ
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i feel it should be phased out over time. id like to see it go away, but a lot of people would be hit hard if it disappeared instantly. there is no justification for the government giving this tax deduction. eliminate it and cut our income taxes.
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Old 08-11-2012, 01:51 PM
 
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I agree. Folks dont even understand what the deduction even represents ,how it plays out or what it means to them.

How many times do you hear people go they have to buy a house for the tax deduction.

What a stupid thought. Imagine wanting to spend 4 bucks from your pocket over and abrove the price of the house so you can get one back ln your taxes.

Like when they cut taxes and took away credit card interest deductions they should do the same here.

Last edited by mathjak107; 08-11-2012 at 02:21 PM..
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Old 08-12-2012, 09:13 AM
 
Location: The Woodlands
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I lived in the UK when this happened over 20 years ago (around 1990). At first house prices went down a little but they soon recovered.

Its a small factor and it needs to go, we can't afford it.
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Old 08-13-2012, 02:29 PM
 
1,738 posts, read 3,883,570 times
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Quote:
Originally Posted by mathjak107 View Post
I agree. Folks dont even understand what the deduction even represents ,how it plays out or what it means to them.

How many times do you hear people go they have to buy a house for the tax deduction.

What a stupid thought. Imagine wanting to spend 4 bucks from your pocket over and abrove the price of the house so you can get one back ln your taxes.

Like when they cut taxes and took away credit card interest deductions they should do the same here.
The reason they buy into that contradiction is that they buy into the religious faith argument that the house of said size is not only a necessity, it is an instrument for the preservation of the wealth they can no longer extract from wages, since as proletariat they haven't been remunerated in wages since 1970 instead being given access to credit to sell the shirt off their back in order to afford the very shirt they're trying collateralize.

Make no mistake, for the proletariat, housing is a good, and and a liability at that, NOT an asset. My parent's generation will go to the grave fire-selling their ill-defined "asset", and every self-preserving member of my generation shall not make the folly of behaving like their parents. This will require a rejection of the silliness of tying the ownership of some silly wood box with a roof as part and parcel of some ideal of prosperity and upward mobility generally conceptualized as the "american Dream". The American Dream in this context exists as the willingness and ability to DOWNSIZE. Rome is falling, adapting requires the rejection of these anachronistic assumptions of wealth and the definition of what constitutes an asset.
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Old 08-13-2012, 06:16 PM
 
1,499 posts, read 2,311,144 times
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Quote:
Originally Posted by BJW50 View Post
Could someone explain how the deduction makes housing affordable?
It doesn't. When we refinanced our house, the amount we paid in interest dropped to a point where we didn't get anything back on it. The tax lady puts it on our taxes every year, but it hasn't done any good for the last 3 years.
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