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Simply eliminating the deduction would suddenly put millions of current homeowners behind the eight-ball. Having purchased their homes at prices that assumed a 25% or so tax subsidy, they will not be able to afford a sale to buyers who do not have access to such a subsidy. Instead of being a wealth-building strategy, home ownership would become a wealth-destroying strategy. That would nor be a positive thing.
I would wager very few people actually calculate their net costs prior to purchase or in reality much of an estimate. I believe mortgage Approvals are based on gross income too so the reality is most people are ignorant to the math, not that the perception alone might not force a negative outcome
Free market, how do people own homes to even take a mortgage deduction?!?!? With the rent prices and evil landlords, how could they have ever broken free from the shackles?
Tax deductions don't drive home purchases. The tail doesn't wag the dog.
That is one of the reasons our home ownership rate has been falling since the housing bubble burst.
High rents, plus student loan debt, have delayed millennials from buying homes on the same timetable as earlier generations. It's simply taking millennials longer to accumulate a down payment and qualify for a mortgage than it took earlier generations.
As a pessimist, I see this trend continuing for the foreseeable future. I even envision a future in which housing tenure is intergenerational - if your parents own their home, you probably will as well; if your parents did not own a home, you probably won't either.
11 million renters spend at least half their income for shelter; they will not be buying homes any time in the foreseeable future, and this trend also is likely to get worse before it gets better.
No reason the deduction couldn't be phased out slowly over a period of several years.
I'd simply grandfather existing loans, so that all existing mortgage loans continue to be covered until they are paid off or refinanced. i.e. you can continue to take the deduction until your current mortgage is normally paid off, but not if you refinance.
more than half of homeowners can't even take the deductions for mortgage interest or real estate taxes since they can't itemize .
the wealthier folks can take the mortgage interest but not the real estate taxes if they are on the amt system .
almost 1/2 of all sales are cash today as well .so count those mortgage interest deductions out too . many buyers are boomer's retiring and relocating with the assets to pay cash .
in the end very little effect .
it is one of the things that sound better than it plays out for most Americans . many renters get the best tax break . they tend to have very few itemized deductions and get money back from the standard deduction that never had any offsetting money spent .
I would be very interested in your source about 1/2 of all real estate sales being in cash.
Is that nationwide or just your state?
But only unreimbursed medical expense above 10% of AGI are actually deductible anymore. It had been 7% for seniors, but that is scheduled to go away for 2017.
yep , and we easily hit that 7% . it was sad to see that number hit so easily . .
I would be very interested in your source about 1/2 of all real estate sales being in cash.
Is that nationwide or just your state?
it varies seasonally and yearly but it is generally between 50-25% most years .
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"Nationwide, nearly 43% of all home sales in the first quarter of 2014 were all-cash purchases, up from nearly 38% in the fourth quarter of 2013 and 19% in the first quarter of 2013. The figure for the first quarter of 2014 is the highest since RealtyTrac began tracking all-cash sales in 2011."
I'm listening to conservative talk radio and these hosts are talking about proposed tax reform.
They just claimed that if the mortgage interest deduction were repealed, new home sales would tank, leading to economic losses (fewer jobs etc).
Really? I rather doubt that. Any data to support or oppose the claim?
Truthfully it's such a small amount that for me it doesn't do that much. I have a high enough income that it really is just a little help.
For example I go every 3 months and buy about 3-400 bucks worth of pet food and take it to my local shelter. It's about 1200 bucks a year. It's something I enjoy doing. I get to deduct I think $400 of that 1200. Maybe a bit less. I don't know. My tax guy does it. I'm not doing it so I can get the deduction. I'm doing it because I enjoy it. We have a few charities we donate to throughout the year. Even if I didn't get the deductions it's something I believe in. So I'll keep contributing
My interst rate is 3.5 on my house. Part of the reason I bought was because the rate was so low it was laughable. Si CEO I pay extra anyway I'm borrowing money for as close to free as I can. And I didnt have to elverage anything to do it.
more than half of homeowners can't even take the deductions for mortgage interest or real estate taxes since they can't itemize .
the wealthier folks can take the mortgage interest but not the real estate taxes if they are on the amt system .
almost 1/2 of all sales are cash today as well .so count those mortgage interest deductions out too . many buyers are boomer's retiring and relocating with the assets to pay cash .
in the end very little effect .
it is one of the things that sound better than it plays out for most Americans . many renters get the best tax break . they tend to have very few itemized deductions and get money back from the standard deduction that never had any offsetting money spent .
We can itemize, but the past few years we've come out ahead taking the standard, anyways!
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