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Old 03-24-2010, 12:57 PM
 
Location: Columbia, MD
553 posts, read 1,474,313 times
Reputation: 392

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Well, l didn't see anyone else posting this, but it looks like the administration is putting out their feelers on the end of the middle class's sacred cow:

Reuters BreakingViews - The Case for Ending the Mortgage Deduction - NYTimes.com

JMO, this is a stalking horse for another tax hike. Get the middle class all riled up and then leave this alone and tax harder elsewhere.

Another headwind for the housing market if this gets serious.
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Old 03-24-2010, 02:07 PM
 
Location: NE Atlanta suburbs
472 posts, read 723,289 times
Reputation: 213
Doubt that pig will fly. If you think it's bad now, just try and sucker punch homeowners (mortgage holders) with this...
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Old 03-24-2010, 02:59 PM
 
Location: Barrington
41,818 posts, read 31,705,675 times
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Just about every administration has, at some point in time, challeged this sacred cow. The only one that was successful I think, occured in 1987 which capped how much interest could be deducted.

Canada, like most nations, does not allow mortgage interest to be deducted. I believe the percentage of home ownership is greater in Canada than that in the U.S., despite that for a brief period of time, one could become a U.S. homeowner with absolutely no skin in the game.

No reason, such a deduction could not be phased out over a 20 year period.
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Old 03-24-2010, 03:29 PM
 
Location: Central FL
1,382 posts, read 3,157,684 times
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I don't really think that deduction benefits the average homeowner that much. I think it saves us something like $70, but only if itemizing comes out better than taking the standard deduction.

I do think it saves high income earners a lot more.

People need to get real because our government is flat broke. The choices that need to be made will not be pretty or comfortable in any way if we want to continue to fund wars and entitlement programs with low tax rates that require us to borrow like there is no tomorrow. Something has to give.
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Old 03-24-2010, 03:46 PM
 
432 posts, read 1,139,325 times
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Quote:
Originally Posted by MovedfromFL View Post
I don't really think that deduction benefits the average homeowner that much. I think it saves us something like $70, but only if itemizing comes out better than taking the standard deduction.

I do think it saves high income earners a lot more.

People need to get real because our government is flat broke. The choices that need to be made will not be pretty or comfortable in any way if we want to continue to fund wars and entitlement programs with low tax rates that require us to borrow like there is no tomorrow. Something has to give.

Mortgage deduction is huge!!!

Someone in the North East with a 300k mortgage @ 5.25 % is paying $15,750 in interest for the 1st year.
Writing off the interest if they are in the 28% bracket thats a $4410. annual tax savings.

I personally think killing this deduction would really increase the foreclosure rate , especially because many people are just making it now.
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Old 03-24-2010, 04:23 PM
 
Location: Boise, ID
8,011 posts, read 22,499,039 times
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Quote:
Originally Posted by beachouse View Post
Mortgage deduction is huge!!!

Someone in the North East with a 300k mortgage @ 5.25 % is paying $15,750 in interest for the 1st year.
Writing off the interest if they are in the 28% bracket thats a $4410. annual tax savings.

I personally think killing this deduction would really increase the foreclosure rate , especially because many people are just making it now.

Depends on your other writeoffs/deductions and how much your mortgage is for.

I have about $100k in a mortgage at 5.75%, and no kids or business expenses. In 7 years, it has always been more beneficial for my husband and I to take the standard deduction.
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Old 03-24-2010, 04:27 PM
 
Location: Niceville, FL
7,275 posts, read 15,279,446 times
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Quote:
Originally Posted by beachouse View Post
Mortgage deduction is huge!!!

Someone in the North East with a 300k mortgage @ 5.25 % is paying $15,750 in interest for the 1st year.
Writing off the interest if they are in the 28% bracket thats a $4410. annual tax savings.

I personally think killing this deduction would really increase the foreclosure rate , especially because many people are just making it now.
You need to compare that to where you're at if you file standard deduction. If you are married filing jointly, the standard deduction is $11,400. So to get the real tax savings, you need to subtract standard deduction from deductable interest and you get $4350. Multiply that by the 28% tax rate, and the 'real' tax savings from itemizing mortgage interest over filing standard deduction is $1218. Which is decidedly enough to real money, but not as huge of an advantage as the interest deduction first seems when you don't compare it to the standard deduction control item. (And for 2009, you can increase your standard deduction by the amount of real estate so that's no longer a pro for itemizing)
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Old 03-24-2010, 05:10 PM
 
432 posts, read 1,139,325 times
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Quote:
Originally Posted by beachmouse View Post
You need to compare that to where you're at if you file standard deduction. If you are married filing jointly, the standard deduction is $11,400. So to get the real tax savings, you need to subtract standard deduction from deductable interest and you get $4350. Multiply that by the 28% tax rate, and the 'real' tax savings from itemizing mortgage interest over filing standard deduction is $1218. Which is decidedly enough to real money, but not as huge of an advantage as the interest deduction first seems when you don't compare it to the standard deduction control item. (And for 2009, you can increase your standard deduction by the amount of real estate so that's no longer a pro for itemizing)
That is true everyone ... I overlooked that point.
Hopefully the Standard Deduction doesn't become the next target !!
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Old 03-24-2010, 05:15 PM
 
58 posts, read 180,451 times
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maybe that same local/state/federal government should charge us tax once for the house purchase, like everything else we buy - instead of having to pay ~2% property tax every year... will that work for them?
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Old 03-24-2010, 05:30 PM
 
1,465 posts, read 4,412,266 times
Reputation: 849
Home mortgage interest is an allowable AMT deduction. Standard deduction is not. This can make a much larger difference than the examples cited above.

I didn't read the article so forgive me if this was covered, but I don't think it will fly because of Obama's insistence that if you make less than $250,000 your taxes will not go up one thin dime. He has breached it a few times already but people have given him a pass because it may not have affected them much. This will be a lot noisier.
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