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Old 09-14-2008, 02:41 PM
f_m
 
2,289 posts, read 7,371,846 times
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Quote:
Originally Posted by StoneOne View Post
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?
If the average person was a renter, the only people who would own property would be landlords. Those would then be the only people with money. All the people I know that are somewhat well off own property and rent to others.

Additionally, and this is a major point for me, when one retires, if you do not own a place to live, then you will have to have a big retirement fund, otherwise you will not be able to afford a decent place during retirement. The goal at retirement is to own a place to live (or have a lot of money) and not have to continue paying rent or mortgage. If not, then there will be a huge number of elderly people who will be in poor living conditions.
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Old 09-14-2008, 03:05 PM
 
485 posts, read 1,629,042 times
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It would put us in an economic depression because it would cause the values of homes to drop even more. Silly idea.
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Old 09-14-2008, 03:22 PM
 
1,956 posts, read 4,682,296 times
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Quote:
Originally Posted by Refugee56 View Post
It would put us in an economic depression because it would cause the values of homes to drop even more. Silly idea.
Not necessarily. If income taxes were cut so as not to pay for the deduction, I doubt you'd see any effect at all. It might help people actually buy a house!
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Old 09-14-2008, 03:38 PM
 
7,099 posts, read 23,919,486 times
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I date back to the time when the interest was NOT deductable. It really reduces the income tax early in the loan when most of the payment is interest instead of principle. Later it's not so much.

When someone rents a house that has a mortgage on it, the interest is included in the price of the rent. I think the cost of the interest is counted as an expense against the taxable income on the rent. It has been a long time since I had any rental property. It may be changed.

And yes, I think it should be repealed. I don't think it will impact the market because people buy a house for many reasons....usually because they want THAT house in THAT neighborhood, near THAT school. They ask themselves if they can handle the monthly payment, not whether or not the ownership will cut the yearly tax bite a little.
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Old 09-14-2008, 03:38 PM
 
16,722 posts, read 18,946,510 times
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Interesting, I didn't look at it at that point of view... it would be true that renters end up paying more because they don't own a home... HOWEVER, look at standard deductions, where a homeowner doesn't get more compared to a renter! One could argue that a "standard deduction" unfairly favors the renter versus the homeowner! To level the playing field, the renter still gets a standard deduction whereas the homeowner gets the standard deduction + mortgage interest because they PAID more to own a home... so in the end, I would say its fair without penalizing the renter, it just evens the playing field versus the renter... now you might say an increase in taxes BUT as long as it is spread over EVERYONE.. than everyone is fairly impacted...
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Old 09-14-2008, 04:26 PM
 
Location: Apple Valley Calif
7,475 posts, read 19,596,619 times
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Quote:
Originally Posted by f_m View Post
There are some places that allow tax deductions for renters.

Also, home owners pay a significant amount in property taxes.
Excellant point, my property taxes ar just under $6000.00 a year..! How would you renters like that? Also, property insurance, and other expenses renters don't see. That stuff adds up. The reason for the tax break is simple. The Goverment wants everyone to own a home. They do all they can to make that possible.
If you chose not to be a property owner, fine, but don't cry because some enjoy the advantages of home ownership.
I say your complaining is just sour grapes...
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Old 09-14-2008, 04:31 PM
 
Location: Apple Valley Calif
7,475 posts, read 19,596,619 times
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Quote:
Originally Posted by StoneOne View Post
Not necessarily. If income taxes were cut so as not to pay for the deduction, I doubt you'd see any effect at all. It might help people actually buy a house!
By this statement, you seem to think Income taxes are high just because of mortgage deductions. Not even close.
Now, if you want to get rid of the IRS and have some sort of flat tax, and get rid of the mortgage deduction, then I'll be on your side, but don't hold your breath unless John and Sarah get elected. Then all of your dreams will come true...
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Old 09-14-2008, 04:31 PM
 
Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,248 posts, read 20,620,972 times
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Quote:
Originally Posted by ndfmnlf View Post
Should the mortgage interest tax deduction be repealed? Some economists argue that the deduction is nothing more than a subsidy to homeowners at the expense of renters. Renters who can't claim the deduction will end up paying higher income taxes since the government will have to offset the loss of the subsidy by raising taxes elsewhere.

RealClearMarkets - Articles - Repeal Housing's Mortgage-Interest Deduction
Yes it should be repealed but not for those who now have mortganges and may have bought with the deduction budgeted. But for new buyers, no more. Same with deductions for children, charity and all that stuff. Instead what the government should do is simply exempt the first $30,000 of every person's income from any taxes except SS.
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Old 09-14-2008, 04:39 PM
 
3,567 posts, read 7,523,141 times
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There is no evidence at all to support the theory that mortgage interest tax deductions affect renters. They don't.

If you're renting, you can't afford to buy. No one willingly shells out a crap ton of money for something they don't own forever. What about all of the single people who can't afford to buy houses/condos? If they didn't have that tax break they'd be royally screwed.

The deduction makes a huge difference to people who own homes. We don't always live in places where the mortgage interest is less than the standard deduction. In fact, increasingly the overwhelming majority of homeowners pay far more than ~$5,000 in interest alone. That doesn't include insurance and property taxes, all of which are insanely expensive.

We are a nation of owners, not renters. This should never change, and I'm quite happy that I get to deduct the cost of my interest.

Last but certainly not least, mortgage interest is a deduction because of the nature of interest, not due to any policy objective. Interest represents the cost of doing business, or in this case, the excess cost you didn't pay on your home. After all, interest is bundled into each payment and that certainly isn't your principal. All kinds of interest are deductible, not just mortgage interest. Mortgages aren't "personal" in nature, as in, I personally didn't lend someone else money and charge interest.

It's worth pointing out that rarely does a taxpayer receive as much of a tax break from the deduction as they paid out. It's an itemized deduction, meaning it just reduces taxable income but not total income. Proportionally the differences in what you pay (deduction vs. no deduction) aren't drastically different.

As a complete EDIT:

Lowering taxes doesn't actually help most people. Tax burdens are only truly onerous on successful white collar single people, and in that case our current tax system is designed to annihilate. I'd be amazed if most families in the United States really had issues because of taxes. Excepting the northeast corridor and Los Angeles, people get by very well without having to worry about paying taxes.

It's healthcare costs that are doing the most harm to people. We hear it so often that we're numb to the concept, but it's painfully true for everyone... Single or married. It's not even that they suck to begin with, it's that they're bad and getting worse at a time when the value of money is diminished. It well and truly blows.
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Old 09-14-2008, 04:54 PM
 
1,956 posts, read 4,682,296 times
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Quote:
Originally Posted by coldwine View Post
All kinds of interest are deductible, not just mortgage interest.
Without debating the rest of the post, other than student loan interest, I can't think of any other interest that's deductible. Certainly not credit card or auto loan interest.
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