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Seeking information on if bailed out homeowners will receive tax deduction on interest, unfair for homeowners to get government subsidies and tax deductions
Has the government addressed whether bailed out homeowners (they will probably get something like $400-1000 per month in housing assistance through reductions in interest rates still be able to claim interest deductions/property taxes on their 1040 tax forms.
That's like "double dipping" Having the government subsidize your mortgage payment and at the same time, getting a big tax deduction on their mortgage interest/property tax deduction.
Does anyone know if Obama's White house addresses this issue?
I would bet Obama's White House hasn't thought through these issues. It could even be triple dipping for some if they have principal forgiven, the tax repercussions are forgiven and they are allowed the deductions.
Yes, interest paid (not any interest subsidy) is still deductable. Obviously the deduction will be smaller because in most cases the interest paid will be lower.
This is a very bad idea letting people essentially get a "housing credit" of upwards to $400-1000 a month plus claiming a "deduction" for the interest.
Whatever "credit" the government is giving these bailed out homeowners each month should be added back to their regular income in the form of a 1099 MISC at the end of the year to make should these homeowners are paying taxes on their subsidy.
There comes a point where Americans who pay their mortgages on time will no longer put up with having to subsidy their neighbors who can no longer afford to pay.
The socialists running this country now want everyone to "share the pain" of a few million irresponsible homeowners. I find it ironic that Obama wants to "help out 95%" of Americans but when it comes out to housing, he really only wants to help out 5-10% of struggling homeowners.
President Obama, how about helping out 95% of homeowners, even the ones that do not need any help?
Afterall he gave a $400/800 "tax credit to 95%" of "working Americans" ; most getting this credit do not need the money.
The socialists running this country now want everyone to "share the pain" of a few million irresponsible homeowners. I find it ironic that Obama wants to "help out 95%" of Americans but when it comes out to housing, he really only wants to help out 5-10% of struggling homeowners.
President Obama, how about helping out 95% of homeowners, even the ones that do not need any help?
Afterall he gave a $400/800 "tax credit to 95%" of "working Americans" ; most getting this credit do not need the money.
I don't necessarily agree with the president on this matter either. But a few million is a lot of people, I don't care where you're from, when you're talking about millions of people then there's something wrong with the system. If you were talking about 10 or 20 thousand, okay. Even 100 thousand. But not a few millions.
Something in the system broke and now he's trying to fix it. He's doing the best he can in a bad situation. Personally, I didn't vote for him, I went for McCain. I really don't know what he would have done differently, God's honest. It really is a mess.
He gave the tax credit to help people pay for things, whether it be the bills or an Ipod. Either way it'll help the economy a tiny bit. And make folks feel a little better to boot.
I don't necessarily agree with the president on this matter either. But a few million is a lot of people, I don't care where you're from, when you're talking about millions of people then there's something wrong with the system. If you were talking about 10 or 20 thousand, okay. Even 100 thousand. But not a few millions.
Something in the system broke and now he's trying to fix it. He's doing the best he can in a bad situation. Personally, I didn't vote for him, I went for McCain. I really don't know what he would have done differently, God's honest. It really is a mess.
He gave the tax credit to help people pay for things, whether it be the bills or an Ipod. Either way it'll help the economy a tiny bit. And make folks feel a little better to boot.
My point is 5-6 million households (say each household has 1-4 people) means less than 5-6% of the total US population is being saved at the expense of the nation (15/20 million out of 300 million US (probably more if you count illegal immigrants).
Obama needs to put his foot where his mouth is. He wants to "help" out 95% of Americans. So Obama needs to help out 95% of responsible homeowners. Just let the 5% get foreclosed. Stabilize 95% of the strong homeowners. Help out those homeowners that are paying INTO Principal and interest on time (even those who do not need help because it will strengthen these already strong homeowners). Do not help those who had interest only or negative amotization loans and little or zero downpayment. So there you have it; those 4-5 million (maybe it's 9 millon?...but that's an oportunistic number by the White House) households he is spending billions can just let the free market take care of itself. Obama can't save 5% of Americans. Maybe they will lose their homes, maybe not. The majority of people who lose their homes do not go homeless. They can go back to renting.
As for the "tax cut" He's helping out 95% of Americans. But the nation is spending an estimated 116 billion for this tax cut. Giving my tax money to people who do not pay federal income taxes (think EITC people...yeah they pay SS/medicare but zero Fed liability) For what? So each person can get an extra $12-15 dollars per paycheck. That's not a real stimulus. Most people will barely noticed a difference and if they did they will just save it.
The media can spin it anyway they want but they say 70 billion is being spent on AMT tax relief for the middle/upper middle class. This is very misleading. Congress has been passing this "AMT patch" every November/December for the past several years. Congress just decided to pass the AMT relief bill in February instead of late in the year.
I don't buy the Democrats spin on helping those in danger because foreclosures hurt all communities. They say we need to do this to protect other homes who are currently not being hurt. Sure the values will decline with each foreclosure but this weeds out all the weak homeowners. The free market will determine what the "bottom" will be. In my zip code in Maryland where the average household income is over 130K, there are very few distress homeowners. Even ones that sell below what they purchased have money to cover their lost. I think there has been only 1 foreclosure in the past 2 years (and that was due to a divorce). The reason is because its a newer community but the builders wanted at least 5% downpayment just to purchase the lot starting in 2002. With the average home selling over 1 million, there were very few investors and most people put down 100-200K downpayments. So with strong homeowners even with a decline in housing values, and the economic downturn, the vast majority of homeowners in my neighborhood are safe.
I'm just mad at this whole mess like you are. Americans need this as a wake up call. You can't let people double dip by getting housing tax (subsidy/credits) and deduct interest/taxes. What happens if these bailed out homeowners default on their homes in 12 months? Are they going to get another bail out?
They need to strengthen the system. Get rid of the weak homeowners. Get rid of the 3.5% FHA downpayment. Raise it to at least 5% and homeowners must show 6 months of living expenses after downpayment has been made (they need at least 6 months of bank statements to show they have this kind of money so to avoid some fishy money infusion just to buy a home and have that money withdrawn right away after the deal is closed.
aneftp,
According to the IRS, the average income for my zip here in MA is just under $63,000 or a little under half of yours. We have over 238 properties that are in pre-foreclosure, foreclosure, owned by the bank or up for auction. So it's a little bleaker up here than down your neck of the woods.
The business real estate doesn't look much better as we're losing small local shops and chain stores alike.
Every day more people are losing their jobs, which will add to the burden further down the road. Is it the fault of these people? No.
So I guess it's just a matter of location and money. If it were your town population is under 10,000 and the vast majority are single family homes with say for argument's sake, 2 people in each, that's a little over 2 % of the total homes in some form of foreclosure. A far cry from the 1 home you have.
I'll tell you one thing, if something isn't done with the economy and soon, then I'm afraid it won't really matter because the vast majority of Americans won't have jobs or homes. As it is now, in some places the sheriff's department won't evict the people from the homes that they live in. They've stopped serving notices altogether.
So he's trying his best for now. We'll need another infusion of money (get those printing presses ready) to stem the new flow of insolvency. Where do you stop? Now, next week, next month. Do you stop funding the mortgage bail out? If you do, the banks shouldn't get any more money either, they knew the loans wouldn't stay floating for long. They even created CDS's specifically for this. So, no money to the people, no more money to the banks and no more money to the insurance industry. There, I think that about covers it.
Gosh it gets worse. I am trying hard to remain optimistic. I am sure that extra $13 per week will come in handy (really, I am not being sarcastic). Maybe I will use the money to go rollerskating weekly with my daughter without taking more dollars from budget.
BTW is this 13 dollars pretax or after tax? If pretax then I guess I will take DD skating, and I will simply watch since after tax money will be just enough to cover skate rental and admission for 1.
The government should give these bailed out homeowners a choice. Say they would have gotten about a $5000 homeowners subsidy in terms of mortgage interest reduction via loan modification for tax year 2009.
And say these homeowners paid $8000 in mortgage interest payments (with the lower interest already taken into account) for tax year 2009.
When filing taxes for year 2009, these homeowners should be given the option to take the mortgage interest deduction or have the government reclaim the housing subsidy they had gotten from Uncle Sam.
This plan will support the economy better and save taxpayers money. Psychologically these bailed out homeowners feel like the government is actually helping them out but they give the government (fellow taxpayers) back money by disallowing mortgage interest payments.
So let the homeowners choose. Add taxes to the housing subsidy they get in the form of a 1099 MISC or lose the mortgage interest deduction. It's their choice and this will save taxpayers money if they homeowners default.
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