U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 04-12-2015, 05:24 PM
 
6,301 posts, read 4,746,934 times
Reputation: 12908

Advertisements

Quote:
Originally Posted by NewToCA View Post
Actually, in your situation you seem to have actually increased the problem.

The taxes on Social Security are based on the Adjusted Gross Income, which includes all income (including rental income) but excludes your itemized deductions and personal exemptions.
I have no rental income. My daughter and her family pay a portion of the costs which are equivalent to what they previously paid for rent. The situation would be different if we actually rented out a portion of the house to a non-family party. Even that would be questionable. There are tens of thousands of illegal rentals where I live: Long Island, NY. There is a huge untaxed cash economy. It is so well established that no politicians will risk trying to tackle the issue. There has been a longstanding compromise. Illegal rentals are tolerated if the owner lives in the house. Long Island has an interesting economy. The cost of living and taxes are very high so much of the economy is underground and based solely on cash. Unfortunately I was salaried and not part of that economy but it is still interesting to see people making major purchases such as cars with wads of cash. Elsewhere you might think it was drug money, but here it is plumbers, electricians, landscapers and a variety of small business people who do part of their business in cash.
Reply With Quote Quick reply to this message

 
Old 04-12-2015, 05:30 PM
 
Location: Sacramento
13,784 posts, read 23,817,529 times
Reputation: 6195
Quote:
Originally Posted by jrkliny View Post
I have no rental income. My daughter and her family pay a portion of the costs which are equivalent to what they previously paid for rent. The situation would be different if we actually rented out a portion of the house to a non-family party. Even that would be questionable. There are tens of thousands of illegal rentals where I live: Long Island, NY. There is a huge untaxed cash economy. It is so well established that no politicians will risk trying to tackle the issue. There has been a longstanding compromise. Illegal rentals are tolerated if the owner lives in the house. Long Island has an interesting economy. The cost of living and taxes are very high so much of the economy is underground and based solely on cash. Unfortunately I was salaried and not part of that economy but it is still interesting to see people making major purchases such as cars with wads of cash. Elsewhere you might think it was drug money, but here it is plumbers, electricians, landscapers and a variety of small business people who do part of their business in cash.
OK, that is a pretty unique situation you present there.

I assumed you were discussing a legitimate dedicated rental unit associated with your residence, much like a duplex in many cities, where you live in a portion of a house and rent out a separate portion of the structure.
Reply With Quote Quick reply to this message
 
Old 04-12-2015, 05:31 PM
 
6,301 posts, read 4,746,934 times
Reputation: 12908
Quote:
Originally Posted by mathjak107 View Post
.......

from just a tax standpoint though ask yourself in which case would your piggy bank have more money at the end of the year. paying all that mortgage interest and getting a small piece back or not having to pay the interest in the first place ?

easy answer..
No the answer is not so easy. You have to ask how much you would have to pay for renting? In many cases the cost of renting for a long period of time is way more than the cost of a mortgage. The mortgage is fixed while the cost of rent will continue to increase. The tax deductions and the appreciation are just gravy on top of those savings.
Reply With Quote Quick reply to this message
 
Old 04-12-2015, 05:33 PM
 
71,714 posts, read 71,829,507 times
Reputation: 49283
provisional income for testing to see how much is taxable is shy of most feductions. it only provides for taking schedule c rental income and credit items.

even muni interest is added back in .
Reply With Quote Quick reply to this message
 
Old 04-12-2015, 05:37 PM
 
71,714 posts, read 71,829,507 times
Reputation: 49283
Quote:
Originally Posted by jrkliny View Post
No the answer is not so easy. You have to ask how much you would have to pay for renting? In many cases the cost of renting for a long period of time is way more than the cost of a mortgage. The mortgage is fixed while the cost of rent will continue to increase. The tax deductions and the appreciation are just gravy on top of those savings.
different issue .whether renting is more or less. but it still does not make a tax deduction a good thing. having cheaper costs than renting by buying and deducting a mortgage can become even cheaper by not paying mortgage interest and having that deduction.

in no case from a TAX standpoint will getting a deduction on an expense be better than not having the expense. this is not a comparison to renting .

if you are borrowing the money at low rates and investing it and actually ahead that would be a different reason for doing it.

but since you were talking just the benefit of the tax deduction i would argue that point.

don't forget a renter moving from a 3 bedroom to a 1 bedroom when the family is gone can see even a bigger drop in housing costs and better cash flow than a homeowner so you really don't want to compare renting vs buying as it is rarely going to be apples to apples.

but the comparison you can do is would i have more or less money in my piggy bank this year with my mortgage or without.

if you are investing that money than great you could have more.

but if you aren't and just claiming the tax deduction than no you are poorer for it.

Last edited by mathjak107; 04-12-2015 at 05:58 PM..
Reply With Quote Quick reply to this message
 
Old 04-12-2015, 05:39 PM
 
6,301 posts, read 4,746,934 times
Reputation: 12908
Quote:
Originally Posted by NewToCA View Post
OK, that is a pretty unique situation you present there.

I assumed you were discussing a legitimate dedicated rental unit associated with your residence, much like a duplex in many cities, where you live in a portion of a house and rent out a separate portion of the structure.
The world is full of gray. Even without a renter we could theoretically be charged more for property tax because we have a second kitchen. I have seen houses for sale where the appliances for the second kitchen were moved to storage or in some cases just disconnected. The house is then sold as single residence. We have locked doors separating the two halves of our house...another gray area.
Reply With Quote Quick reply to this message
 
Old 04-15-2015, 08:11 AM
 
Location: Central Massachusetts
4,800 posts, read 4,852,811 times
Reputation: 6379
Quote:
Originally Posted by jrkliny View Post
No the answer is not so easy. You have to ask how much you would have to pay for renting? In many cases the cost of renting for a long period of time is way more than the cost of a mortgage. The mortgage is fixed while the cost of rent will continue to increase. The tax deductions and the appreciation are just gravy on top of those savings.

mathjak is absolutely right. You can have that mortgage and at the end of it all is the equity in the home. A long the way you are paying interest that has compounded over the long term and taxes that in some communities are very high. Yes you get a tax deduction for some and I say this again "SOME" of your interest. It does not reduce it to all.

So let's bring this forward to someone who is retiring and downsizing which will be most of us as we age. We go from a big house with all its maintenance to a small apartment with no maintenance. You might pay half that mortgage in an apartment in like communities. A house in Boston for example will run you 7 figures and if you dont pay cash your mortgage is going to be 3000 to 6000 if not more. An apartment will run 1400 to 3000 a month depending on the house and location and all. It is all relative if you look that way.

Only way to cut is to buy outside of the areas that you would need to be if you were needing services.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top