State and Local Taxes - Potentially Non-deductable (New York, Hempstead: mortgage, credit)
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I'd hate to say it l, but chicken little is right, here.
This won't decimate the area but it will hurt. Many home owners on LI rely on being able to deduct their taxes, and the amount is above the revised standard deduction.
Regardless if the standard deduction going up, it still removes the tax benefit of home ownership. Very unhappy about this plan.
It just evens out the playing field a bit since we all get the higher standard deductions . It just takes the edge off home owners .
Where we live and the taxes we pay are personal choices so they are kind of pulling those parameters out of the tax equation. Now they should work on the fact there are tax incentives to bang out more kids since that is a personal choice too.
Lots of things in our tax system reward certain personal choices. The question comes down to which personal choices should we keep rewarding .
it will cause those who have big, expensive houses (and the income to pay for them) to lose the deduction on a decent part of their property tax
This is arguably good as it stops rewarding states and local governments for inefficient use of money and ridiculously high property taxes in the first place. It's not that hard to find places with a $20,000+ annual property tax burden on a $750,000 house at all, which is flat-out nuts. Many of these places have seen property taxes double or more over the last decade.
Where Denninger is wrong;
Places such as Nassau County NY WILL NOT LOWER TAXES, they cannot lower property taxes because they are broke and contractually committed to a legacy of debt and crime by politician, instead the value of your property will go down with this tax plan.
People made choices that a long standing tax code incentivized. This will hurt a lot of homeowners - it essentially rewards renting.
Renters were always the one with a better deal . Most renters can not itemize so they usually are so far under if a couple they get to fly the empty seats and get back money they never spent.
homeowner's side usually spend that money on real estate taxes and interest so they either don't get to fly the empty seats or the standard deduction eats up a lot of what they spent .
Nothing really new here for renters as far as benefiting
Renters were always the one with a better deal . Most renters can not itemize so they usually are so far under if a couple they get to fly the empty seats and get back money they never spent.
homeowner's side usually spend that money on real estate taxes and interest so they either don't get to fly the empty seats or the standard deduction eats up a lot of what they spent .
Nothing really new here for renters as far as benefiting
The tax plan as is might cause riots in the street; it eliminates Earned Income Credit (negative taxes, where the government hands out money). Earned income credit is also a major vector for fraud by tax service. There are lots of folks abusing EIC.
I always say , to fix the social security system break off disability and make it part of welfare.
The fraud and abuse in that too is off the hook. It became the new unemployment insurance extension for those who can worm their way in through crooked gate keepers
It just evens out the playing field a bit since we all get the higher standard deductions . It just takes the edge off home owners .
Where we live and the taxes we pay are personal choices so they are kind of pulling those parameters out of the tax equation. Now they should work on the fact there are tax incentives to bang out more kids since that is a personal choice too.
Lots of things in our tax system reward certain personal choices. The question comes down to which personal choices should we keep rewarding .
People banging out more kids ensures the economy will keep going for more generations. Not to mention the cost of raising children itself is a huge growth driver. If everyone stopped having kids we'd be in big trouble - Like Japan and many countries in Europe with no population growth.
I still don't think this will fly but we'll see. Under current IRS rules school expenses for working couples with kids would qualify for the child care credit. This would actually boost the tax benefit for those with school taxes at or around $6k and 2 or more kids in school.
People banging out more kids ensures the economy will keep going for more generations. Not to mention the cost of raising children itself is a huge growth driver. If everyone stopped having kids we'd be in big trouble - Like Japan and many countries in Europe with no population growth.
I still don't think this will fly but we'll see. Under current IRS rules school expenses for working couples with kids would qualify for the child care credit. This would actually boost the tax benefit for those with school taxes at or around $6k and 2 or more kids in school.
I thought under current IRS rules real estate taxes paid to schools are deducted just like other real estate taxes. In effect they are considered local taxes because they are not subject to the capped childcare deductible which is 3k per child up to 6k total. For all intents and purposes they are not childcare expenses because whether or not you have kids or the number of kids you still have to pay. If they were in fact childcare expenses then most people would see their taxes halved once the kids go off to college. So I assume they won't be deductible. Those paying 20k in property taxes coupled with 15k+ in state taxes will definitely take a big hit. At current interest rates with the new standard deduction, mortgages up to 700k would have no impact to your tax bill. That being said the rates are lower so net-net this may have no impact on one's overall tax bill depending on the details to be worked out.
Last edited by bumblebyz; 04-27-2017 at 10:02 AM..
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