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Home Depot stock tanked, that should give you an indication.
The bigger problem is not being able to deduct state income taxes. Without that, I don't think many people can itemize anymore. 24K threshold is hard to hit without personal exemptions, capped real estate taxes, capped mortgage interest, no state income taxes...
Home Depot stock tanked, that should give you an indication.
The bigger problem is not being able to deduct state income taxes. Without that, I don't think many people can itemize anymore. 24K threshold is hard to hit without personal exemptions, capped real estate taxes, capped mortgage interest, no state income taxes...
I agree. And I think that means we are presuma going to see price decreases on homes currently selling for above 500k with over 10k property taxes. Especially since mortgage interest on purchases over 500k is now not tax deductible either
This is all assuming this passes, which is a big question mark. If it does pass, could certainly change (and I hope it does change)
I agree. And I think that means we are presuma going to see price decreases on homes currently selling for above 500k with over 10k property taxes. Especially since mortgage interest on purchases over 500k is now not tax deductible either
This is all assuming this passes, which is a big question mark. If it does pass, could certainly change (and I hope it does change)
The difference isn’t going to be that great, unless interest rates go up a lot. The cap is going from 1M to 500K.
Take the interest you we’re going to be deducting from the 500k. At 4% that would be 20k. But then you have to subtract the 10k of property tax that you are now able to deduct.
So you are paying tax on an extra 10k of income. I’m not happy about it, but it is certainly not enough money to cause someone to change their home buying habits.
It would be a wash for most people who doesn't have multiple buildings. If you make more money your income tax just went down with the deal and it's time to complain to your town why your taxes are so high.
I think a lot of towns already subsidize property tax increases by using other use taxes like garbage collection and water sewage tax.
Majority of people that rents are gonna support it but it will push rents higher as property owners will pass down the tax hike.
Majority of people that rents are gonna support it but it will push rents higher as property owners will pass down the tax hike.
people dont seem to understand property tax + mortgage interest for investment properties are NOT related to this $10k SALT + 500k mortgage interest proposal, they are business expenses and not affected.
one interesting thing i always find is if i have an annual rental income of $20k and I paid annual mortgage interest of $10k on a RENTAL property, my tax obligation is only on the $10k, as mortgage interest is considered business expense. But if i dont have a mortgage on the rental, then my tax is on the entire $20k. This to me is always strange since why wouldnt any investment property owner get a mortgage on their rental as business expense to reduce the tax burden? especially with the current low rate.
The difference isn’t going to be that great, unless interest rates go up a lot. The cap is going from 1M to 500K.
Take the interest you we’re going to be deducting from the 500k. At 4% that would be 20k. But then you have to subtract the 10k of property tax that you are now able to deduct.
So you are paying tax on an extra 10k of income. I’m not happy about it, but it is certainly not enough money to cause someone to change their home buying habits.
But you could deduct both property tax and mortgage interest previously. So on a house with a mortgage of over a million dollars at 4% interest and 20k property taxes, you are now paying taxes on an additional $20,000 a year.
But you could deduct both property tax and mortgage interest previously. So on a house with a mortgage of over a million dollars at 4% interest and 20k property taxes, you are now paying taxes on an additional $20,000 a year.
It might even be more than that.
Previously, state income tax, interest on mortgage (~$40,000for $1 million @ 4%) plus $20,000 in property taxes are tax deductible
Now, only interest on the first $500,000 is tax deductible ($~20,000 in example cited above) and only $10,000 in property AND state income taxes.
Taxable income has gone up $20,000 in interest, + $10,000 in property taxes + all state income taxes ($15,000 for married couple earning $300,000+).
But you could deduct both property tax and mortgage interest previously. So on a house with a mortgage of over a million dollars at 4% interest and 20k property taxes, you are now paying taxes on an additional $20,000 a year.
Anyone who can afford to pay a mortgage on a $1M+ home is going to be paying the AMT, so they will not be deducting property tax. Under the new bill, there is no more AMT, so they will be able to deduct $10K of property tax, which is new to them.
Previously, state income tax, interest on mortgage (~$40,000for $1 million @ 4%) plus $20,000 in property taxes are tax deductible
Now, only interest on the first $500,000 is tax deductible ($~20,000 in example cited above) and only $10,000 in property AND state income taxes.
Taxable income has gone up $20,000 in interest, + $10,000 in property taxes + all state income taxes ($15,000 for married couple earning $300,000+).
However, the AMT is being released...
This is the same answer as my previous post. I have not been able to deduct either state income tax or property tax since I was on a resident’s salary because of the AMT. Mortgage interest is the only one of these three that is not taxed in the AMT.
That is why it makes no difference to me if they take away either of these deductions. It just puts everyone else in the same boat as I have been in for the past couple of decades.
Unless they do away with the AMT, then it starts to matter.
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