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Old 08-15-2017, 08:13 PM
 
Location: Saint John, IN
10,653 posts, read 3,354,840 times
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Quote:
Originally Posted by oneslip View Post
Just curious how those on the board feel if many current tax deductions such as mortgage interest & charitable giving were eliminated and a higher standard deduction was applied?


Since I have not read any further into what is actually being proposed just on the surface I think it could be a good thing. If the real estate interest deduction is eliminated that could put pressure on housing prices and bring housing back to being affordable to more middle class families while the increased standard deduction would make up for the mortgage deduction. In fact a higher standard deduction may be more beneficial to most.


As for charitable donations- I know there is a fear that donations will lower but I would certainly hope those that do give are giving because they truly want to help as opposed to just jockeying their taxes. Most truly wealthy people I know give because they believe in the cause. My issue with most charities is how little actually goes to the cause and how much lines the admin's pockets.
I fail to see how eliminating the mortgage deduction would bring home prices to a more affordable level? I honestly don't think it would affect home prices at all. Most people don't purchase a home based on what kind of deduction they will get for it!
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Old 08-15-2017, 08:28 PM
 
9,645 posts, read 4,821,301 times
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Yes they do in HCOL areas.
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Old 08-15-2017, 09:00 PM
 
Location: Saint John, IN
10,653 posts, read 3,354,840 times
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Quote:
Originally Posted by NewbieHere View Post
Yes they do in HCOL areas.
We lived in Chicago, one of the highest COL areas in the country and no one I knew bought a home solely based on getting a home mortgage interest deduction!
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Old 08-15-2017, 10:36 PM
 
5,764 posts, read 1,311,534 times
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Well I think the home mortgage deduction inflates housing prices and should be done away with. If that happens housing prices will take a big hit but at least be cheaper for new buyers. The charitable deduction should go away too. Pretty much a loophole for wealthier people.

All of this should be simplified. I have long believed if you can do your taxes on a post card without all the complications that will benefit everyone. I know most file electronically but you get my point. Simplify.
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Old 08-16-2017, 06:05 AM
 
Location: Central CT, sometimes NH.
3,256 posts, read 4,921,264 times
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I have a bigger problem with property taxes and income taxes than RE interest. It amounts to double taxation if not deductible since you would be being taxed twice on your gross income. In Connecticut the property and income taxes amount to a median deduction of just over $18,000 according to an article I read in a local publication. That's a lot of income to be paying taxes on twice. Additionally, our state receives one of the smaller shares of the federal taxes that we pay out. If our state is paying out federal dollars that support other states where property taxes and income taxes (or lack of) are in essence indirectly subsidized by our taxes then the elimination of our deductibility for property taxes and income taxes would be a huge slap in the face.
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Old 08-16-2017, 08:05 AM
 
11,515 posts, read 5,940,180 times
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Quote:
Originally Posted by NewbieHere View Post
Yes they do in HCOL areas.
The people in the sweet spot for itemized deductions are married couples making about $250K in the high COL regions. They have three big ticket writeoffs between mortgage interest, property taxes, and state/city income tax. They're in the 28% bracket hovering on the 33% bracket a smidge below where the AMT alternate universe and phase out of itemized deductions kicks in. Your basic 5%er. They get a 28% subsidy and it adds up to fairly large dollars. On top of that, they're also maxing out their 401(k) which further keeps them out of AMT and itemized deduction phase-out hell.

Owning a home in a gold plated town with a gold plated school system that requires that kind of income cements the socioeconomic segregation we see in the United States. I've benefited from that structure my whole life but it's not great public policy. I attended that gold plated public school system as a child. I lived my entire life in those kinds of towns that were stuffed full of people just like me.

If you kill the interest and property tax writeoff, it levels the playing field a bit since 5%ers don't get the 28% subsidy. Do I think it's going to happen? Nope. Those 5%ers vote and they're the ones who contribute to political campaigns. The system is rigged and the people who control the system ainna gonna unrig it.
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Old 08-16-2017, 08:07 AM
 
1,912 posts, read 897,643 times
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Quote:
Originally Posted by CGab View Post
I fail to see how eliminating the mortgage deduction would bring home prices to a more affordable level? I honestly don't think it would affect home prices at all. Most people don't purchase a home based on what kind of deduction they will get for it!
Quote:
Originally Posted by CGab View Post
We lived in Chicago, one of the highest COL areas in the country and no one I knew bought a home solely based on getting a home mortgage interest deduction!
I live in the #3 highest cost of living area in the US, right after San Francisco and it's also something I never considered, the agent never brought up, and I've never heard friends discuss when buying houses (or people discuss on the local board on this forum). It always boils down to a combination of price (what the total monthly mortgage, if any, will be), commute, and schools... maybe there is secondary consideration to how much the property tax or HOA fees are, but never how much the mortgage interest deduction will be. The deduction is a nice bonus, but not worth making it a major factor in buying a home. Maybe it's something that people who invest in real estate do?

But even if somehow it did impact housing costs (they went down) why wouldn't that just mean inventory goes down? That's what happened last time. I was in the market for a house at the bottom of the recession and while prices were good, but inventory was sparse. It was hard to find a house because the only people selling were those who "had" to for various reasons and there were a lot of foreclosures in poor shape. I actually lost out on a few houses due to bidding wars (I didn't want to get in the frenzy). I think I got my house only because the sellers had a condition that the house not sell until after the school year ended. During this time a lot of people even decided not to sell and, instead, rent their houses. Honestly, I'm looking to move in about 5 years. If, for whatever reason, the market is so low that I would lose money, I'll rent it before I sell it. The rental rates for other homes in my neighborhood just like mine is about $500-$600 more than my current mortgage.
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Old 08-16-2017, 08:36 AM
 
Location: Beautiful Rhode Island
6,326 posts, read 10,514,998 times
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Quote:
Originally Posted by flint8ball View Post
How about a flat % tax and cut government spending. That sounds good to me. Think of all the time, money and energy that would save... and gut the IRS too!
The flat tax is a regressive tax unless the first bracket exempts all of the poor and much of the middle class- which is not likely. I'm defining, for the purpose of argument, middle class as about $125k a year income, needed for a family of 4 in most environments.

Allow me to give you an example of "regressive":

Trump buys a bicycle for exercise and pays $26 in sales tax on it.

Joe buys a bicycle to get to his job at McDonald's and pays $26 in sales tax on it.

Who can afford the $26 more as a proportion of income?

A flat tax would have to be extremely light on the lower income and extremely heavy on the rich to work. Look at what the Republicans have already proposed, and check to see if you will save.


Google flat tax and regressive for more info.
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Old 08-16-2017, 10:36 AM
 
7,693 posts, read 11,322,013 times
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Quote:
Originally Posted by CGab View Post
I honestly don't think it would affect home prices at all. Most people don't purchase a home based on what kind of deduction they will get for it!
Of course they do. They use it to figure what their actual monthly outlay will be upon purchasing the property.


Quote:
Originally Posted by CGab View Post
We lived in Chicago, one of the highest COL areas in the country and no one I knew bought a home solely based on getting a home mortgage interest deduction!
LOL. Chicago may be high for the Midwest, but it is nowhere close to being among the highest housing cost areas in the country. it doesn't even come close to making this list of the top 23 metropolitan areas.

The salary needed to buy a home in most expensive US housing markets - Business Insider


In fact, according to this article in Chicago Curbed, Chicago didn't even make the top 100 zip codes in priciest real estate markets, lol.

"And while the North Shore and neighborhoods like the Gold Coast and Magnificent Mile are well known for their pricey real estate, the Chicago area (and Illinois for that matter) didn’t rank in PropertyShark’s list of 100 most expensive zip codes in the U.S. Zip codes throughout New York, Miami, Los Angeles, and the San Francisco Bay area dominated the list however. "

https://chicago.curbed.com/2017/3/14...expensive-area


So enough with Chicago being one of the highest COL areas in the country, lol.

Last edited by mjlo; 08-17-2017 at 10:40 AM.. Reason: too personal
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Old 08-16-2017, 11:28 AM
 
10,750 posts, read 20,220,270 times
Reputation: 9890
Average mortgage deduction saved the typical taxpayer around $50/month in taxes...for the wealthy (those earning over $200k) the average was >10x as much.

Trump wants to double the standard deduction and take away a lot of the loopholes only benefiting the top x% of tax payers, yet the unwashed masses freak out over "losing" a $50/month "savings" that they'll more than make up for on the other side. Idiots.
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