Should the Mortgage Interest Tax Deduction be Repealed? (insurance, loan, buy houses)

[1AngryTaxPayer]

I'll wager a larger % of tax payers are home owners than renters, that being total taxes given to the govt so I am fine with some incentive or tax relief. There are enough other taxes that penalize people for being successful.

[Nor'Eastah]

Originally Posted by ndfmnlf

In other words, it will make the real estate market and housing prices rational again.

If it's rational and makes sense, the government won't bother with it.

Too busy putting $$$ into the pockets of the Wall Street banksters.

[StoneOne]

Originally Posted by 1AngryTaxPayer

I'll wager a larger % of tax payers are home owners than renters, that being total taxes given to the govt so I am fine with some incentive or tax relief. There are enough other taxes that penalize people for being successful.

Those taxes should without a doubt be lowered or eliminated.

The only rational taxes in my mind a flat sales tax that does not discriminate according to product. That way, someone is taxed only on the basis of his consumption.

All other taxes and deductions are nothing more than government meddling at best, thievery at worst.

[ndfmnlf]

The other benefit to repealing the subsidy is that it will enable the government to cut income taxes. Why? Because the subsidy (which is a loss to the government amounting to close to $100 billion annually) will now be eliminated, so the government doesn't have to offset that loss by imposing high income taxes.

The mortgage deduction is an entitlement no different from social security, medicare, medicaid, etc., but an entitlement given to the middle and upper class.

[f_m]

There are some places that allow tax deductions for renters.

Also, home owners pay a significant amount in property taxes.

[StoneOne]

Originally Posted by f_m

Also, home owners pay a significant amount in property taxes.

By that logic, though, I should get a federal tax deduction for the local excise taxes I pay on alcohol.

By the way, if we're going to offer a mortgage interest deduction, why not an interest deduction for credit cards, business loans, car loans. What is so special about houses as a product?

[ViewFromThePeak]

Originally Posted by ndfmnlf

The deduction is a subsidy from the government given to homeowners. It is a form of government intervention into the real estate market. As such, it distorts the market by inflating the value of homes. The subsidy incentivizes people to buy homes, hence the demand for homes will increase, hence the price of homes will increase. Remove the subsidy, and the incentive to buy homes based on the subsidy disappears, and prices will go down. People will still be buying homes, but their decision will not be influenced by the fact that they will get a government subsidy. Their decision will be based on their actual need for the home and whether they have the income to afford it. In other words, it will make the real estate market and housing prices rational again.

This is another argument that favors the thesis that homes are by in large depreciating assets over the long run. The cost to repair, insure, and pay interest on the mortgage over time overruns the cost benefit of owning. Owning a home is meant solely for the purposes of hanging your hat. The pride of ownership is no more or less valuable than owning a car or boat.

[ViewFromThePeak]

Originally Posted by 1AngryTaxPayer

I'll wager a larger % of tax payers are home owners than renters, that being total taxes given to the govt so I am fine with some incentive or tax relief. There are enough other taxes that penalize people for being successful.

My investment advisor has about $50M in the bank and doesn't own a lick of real estate. Maybe he's an outlier, but he (like I) knew the housing market was doomed for the most part about 5 years ago. So, you're wrong. Some peole much more successful than yourself don't own.

I just sold my home and plan on sitting on the sidelines while the collapse goes on, but I can see why renters felt as though they were being treated unequally.

[foma]

The interest tax deduction you are referring to is a cost to the government. It's not in the budget, per say, but it is costing the government money. Since I've never owned a home but want to because of the deduction I am going to side with the "nos". I've come too close for it to be taken away! From a goverment perspective, yes, it should be repealed, however.

[StoneOne]

Originally Posted by foma

From a goverment perspective, yes, it should be repealed, however.

Which essentially means from a "taxpayer perspective"