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Old 03-25-2010, 05:02 PM
 
Location: Boise, ID
5,368 posts, read 10,281,085 times
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Quote:
Originally Posted by MadManofBethesda View Post
No, it has nothing to do with your house. It doesn't affect you because you live in one of the seven or so states that don't have a state income tax. That's the reason you think it is overblown. For many American homeowners it is a big deal because their state income tax by itself can equal or exceed the standard deduction. Therefore, they save up to a third of their mortgage interest due to its deductibility.

My state has income tax, and I still take the standard deduction. Hubby and I make about $60k in a good year, and even at that, with a mortgage, the standard deduction is still better.

Personally, I think the number of people who take the write off is overestimated, but not by as much as some here are stating. The problem is that everyone assumes that if you own a home, you get to write off the interest, no matter what, and that is very often either not true, or only partly true.
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Old 03-25-2010, 08:18 PM
 
5,167 posts, read 5,861,667 times
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Quote:
Originally Posted by Lacerta View Post
My state has income tax, and I still take the standard deduction. Hubby and I make about $60k in a good year, and even at that, with a mortgage, the standard deduction is still better.

Personally, I think the number of people who take the write off is overestimated, but not by as much as some here are stating. The problem is that everyone assumes that if you own a home, you get to write off the interest, no matter what, and that is very often either not true, or only partly true.
No offense, but I'm not talking about a rural state with more livestock than people. I'm talking about states where the majority of people actually live. Most major cities in this country have a much larger population than the entire state of Idaho. People in NY, Boston, Chicago, Philadelphia, Baltimore, Atlanta, L.A., SF, Denver, etc., etc., etc. pay enough in income and property taxes to ensure that their mortgage interest is fully deductible from dollar one.
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Old 03-26-2010, 09:25 AM
 
Location: Boise, ID
5,368 posts, read 10,281,085 times
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Quote:
Originally Posted by MadManofBethesda View Post
No, it has nothing to do with your house. It doesn't affect you because you live in one of the seven or so states that don't have a state income tax. That's the reason you think it is overblown. For many American homeowners it is a big deal because their state income tax by itself can equal or exceed the standard deduction. Therefore, they save up to a third of their mortgage interest due to its deductibility.
Quote:
Originally Posted by MadManofBethesda View Post
No offense, but I'm not talking about a rural state with more livestock than people. I'm talking about states where the majority of people actually live. Most major cities in this country have a much larger population than the entire state of Idaho. People in NY, Boston, Chicago, Philadelphia, Baltimore, Atlanta, L.A., SF, Denver, etc., etc., etc. pay enough in income and property taxes to ensure that their mortgage interest is fully deductible from dollar one.
Ok, so what you MEANT to say was that for people who live in high cost of living areas in states with state income tax, or people with a lot of writeoffs in general, mortgage writeoffs are a big deal.

Of course, it also doesn't effect people who have no mortgages, either because they own their home outright, or because they can't afford to buy at all. Between all that, I'd say you've eliminated at least half the population of the US, maybe more. In addition, even in areas that can pick up interest "from dollar one", there are many people with small mortgages for whom the writeoff is small.

Oh, and the Boise Metro area is about half a million people now, so it might not be "big city" by your standards, but I certainly don't keep cows and pigs in my backyard. The rest of Idaho is very rural, but Boise, not so much. Isolated, yes; rural, no.
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Old 03-26-2010, 09:29 AM
 
Location: Niceville, FL
4,543 posts, read 8,279,412 times
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Quote:
Originally Posted by MadManofBethesda View Post
No offense, but I'm not talking about a rural state with more livestock than people. I'm talking about states where the majority of people actually live. Most major cities in this country have a much larger population than the entire state of Idaho. People in NY, Boston, Chicago, Philadelphia, Baltimore, Atlanta, L.A., SF, Denver, etc., etc., etc. pay enough in income and property taxes to ensure that their mortgage interest is fully deductible from dollar one.
We're in the fourth most populated state in the country, and a lot of people here who bought before about 2003 are better off taking standard than itemizing.
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Old 03-26-2010, 10:04 AM
 
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Originally Posted by beachmouse View Post
We're in the fourth most populated state in the country, and a lot of people here who bought before about 2003 are better off taking standard than itemizing.
I feel like I'm hitting my head against a wall.

I'll try this one more time:

YOU ARE IN A STATE WITHOUT AN INCOME TAX!

The mortgage interest deduction does not come into play as much in the seven or so states that do not tax income.

It makes a big difference for people who live in NY, NJ, MA, PA, OH, IL, MD, VA, CA, etc. etc. etc. (Do I really need to go on?)
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Old 03-26-2010, 10:26 AM
 
5,167 posts, read 5,861,667 times
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Quote:
Originally Posted by Lacerta View Post
Of course, it also doesn't effect people who have no mortgages, either because they own their home outright, or because they can't afford to buy at all.
This is a joke, right? This really can't be a serious point that you are trying to make, can it?

The issue under discussion is how important the mortgage interest deduction is TO PEOPLE WHO HAVE MORTGAGES!

Quote:
Originally Posted by Lacerta View Post
Oh, and the Boise Metro area is about half a million people now, so it might not be "big city" by your standards, but I certainly don't keep cows and pigs in my backyard. The rest of Idaho is very rural, but Boise, not so much. Isolated, yes; rural, no.
Excuse me, but you said you lived in A STATE with no income tax. My rebuttal was based on the fact that there are only about 1.5 million people in the entire state, which is less than most major cities, and therefore Idaho is not indicative of the situation of most people who own homes in states with an income tax.
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Old 03-26-2010, 11:24 AM
 
Location: Boise, ID
5,368 posts, read 10,281,085 times
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Quote:
Originally Posted by MadManofBethesda View Post

Excuse me, but you said you lived in A STATE with no income tax. My rebuttal was based on the fact that there are only about 1.5 million people in the entire state, which is less than most major cities, and therefore Idaho is not indicative of the situation of most people who own homes in states with an income tax.
I said no such thing. I said my state DOES have income tax. If you weren't talking about cost of living, I'm not sure why a higher population has anything to do with this discussion.
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Old 03-26-2010, 11:56 AM
 
Location: Boise, ID
5,368 posts, read 10,281,085 times
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Quote:
Originally Posted by MadManofBethesda View Post
This is a joke, right? This really can't be a serious point that you are trying to make, can it?

The issue under discussion is how important the mortgage interest deduction is TO PEOPLE WHO HAVE MORTGAGES!


I'm sorry, I thought it was an open discussion on the overall importance of the writeoff, since I thought we were talking about how many taxpayers actually benefit from this, not just how many homeowners. Ok, so figuring only people who have mortgage then.

By your own statement, people who live in states with no state income tax aren't included in your argument. Looking up which states those are, and their populations, that is about 20% of the population of the US. That is a significant percentage. You are just going to pretend 1 out of 5 people in the US doesn't exist for the sake of your argument?

Then there are people in rural states, who apparantly don't count either. Call that another 5% of the population (That one is made up, since I don't know what states you consider rural. Many people consider all states that are not near New York (plus California) to be rural), so then we are talking at least 1 in 4 doesn't count.

So, if you are part of the 75% of the population that lives in non-rural states that charge state income tax, and you have a mortgage, the writeoff is important. Then you add in those in the other 25% who have lots of writeoffs and itemize anyway, but you subtract those in the 75% who have small mortgages so the tax savings are negligible. Of course, then you add in those in the 25% who own very expensive homes/have high mortgages. For them, it ABSOLUTELY is about the cost of their house. That could be THE factor that makes it better for them to itemize. So to say it isn't about your house value isn't true for a large percentage of the population.

I'm not trying to argue that there aren't a lot of people who benefit from the write off. My point was that when people say "You can write off your interest" as a hard FACT, they are wrong. There are a lot of people for whom the numbers don't work out that way. That's all I was ever saying.
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Old 03-26-2010, 12:37 PM
 
2,090 posts, read 1,935,462 times
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Quote:
Originally Posted by Lacerta View Post
I'm sorry, I thought it was an open discussion on the overall importance of the writeoff, since I thought we were talking about how many taxpayers actually benefit from this, not just how many homeowners. Ok, so figuring only people who have mortgage then.

By your own statement, people who live in states with no state income tax aren't included in your argument. Looking up which states those are, and their populations, that is about 20% of the population of the US. That is a significant percentage. You are just going to pretend 1 out of 5 people in the US doesn't exist for the sake of your argument?

Then there are people in rural states, who apparantly don't count either. Call that another 5% of the population (That one is made up, since I don't know what states you consider rural. Many people consider all states that are not near New York (plus California) to be rural), so then we are talking at least 1 in 4 doesn't count.

So, if you are part of the 75% of the population that lives in non-rural states that charge state income tax, and you have a mortgage, the writeoff is important. Then you add in those in the other 25% who have lots of writeoffs and itemize anyway, but you subtract those in the 75% who have small mortgages so the tax savings are negligible. Of course, then you add in those in the 25% who own very expensive homes/have high mortgages. For them, it ABSOLUTELY is about the cost of their house. That could be THE factor that makes it better for them to itemize. So to say it isn't about your house value isn't true for a large percentage of the population.

I'm not trying to argue that there aren't a lot of people who benefit from the write off. My point was that when people say "You can write off your interest" as a hard FACT, they are wrong. There are a lot of people for whom the numbers don't work out that way. That's all I was ever saying.
I will support that argument from Florida perpective through my simple calculation:

Based on the median house price for the state, if everything is financed (meaning with zero down, and prevailing interest rate, just for an example), add a property tax (which is deductable together with mortgage interest) there will be no advantage compared to standard deduction for those, say, married filing jointly. So, more than half of the people who own house here are actually better of by standard deduction. I would argue the same to other states too. Now add the home ownership rate and you get where I am going.
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Old 03-27-2010, 12:30 AM
 
5,167 posts, read 5,861,667 times
Reputation: 5976
Quote:
Originally Posted by Lacerta View Post
I said no such thing. I said my state DOES have income tax. If you weren't talking about cost of living, I'm not sure why a higher population has anything to do with this discussion.
Yes, my error. I was typing quickly and inadvertantly typed no income tax. But the emphasis of the sentemce was the capitalized word STATE. You noted thsat you lived in a STATE with income tax; hence my rebuttal concerning the small population in your state. No need to get defensive about Boise.
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