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The personal value judgments on a non-actor hardly counter the fact that as the cost of credit climbs, pools of qualified home buyers will shrink. Such credit shrinkage is of course EXACTLY what caused home prices to decline after 2006.
so what percentage of the pool of potential buyers will disappear that you consider to be "significant"? You must have a sense for it since you used that particular qualifier.
the deduction should be phased out and other taxes should be reduced to ensure that the government doesnt get any additional revenue.
nobody really knows exactly how eliminating the deduction will impact home values. i can tell that people in that industry dont want to lose the deduction for fear it will hurt their business. but the government doesnt have a right to influence the value of people's homes or manipulate people's actions by imposing taxes or tax benefits on specific things.
Just as the credit crisis was hardly a significant market destabilization. After all, it only affected the tiny number of people who needed to sell their homes in the near-term. What harm could have come from that?
The fact that you blithely equate eliminating the mortgage interest deduction with the economic crisis of a decade ago demonstrates why people should not pay any further attention to your comments.
Is there an artificial inflation of house price because of the deduction allowance for mortgage interest?
I have read that construction cost is down and is one reason why huge McMansions are being built. If the deduction goes away would it bring real estate prices down? isn't that better in final analysis that demand will pick up, and more medium size houses in mid range price, which are now in short supply, will be built?
Like LOWER Fairfield county, many would just pay cash for their house; or have a very short term mortgage.
Actually, it allows people to have money in other investments like the stock market etc. It is very, very important as a driver to the economy for middle America. The top 10% don't need it but everyone else does.
Originally Posted by artillery77 The interest deduction is a holdover from a time when all interest used to be deductible. The demise of interest deductibility doesn't seem to have stopped Americans from taking on non-deductible debt.
The argument against taking away the deductibility of property is fairly simple. Currently I have rental properties. Take away the deductibility as an individual and I'll instead need to form a company to put the assets into and then be able to deduct the interest. The net losers would be those without enough property to afford the expense of forming a company, which would in effect discourage private home ownership.
No need to 'form a company' just file it on a Schedule E.
RIF
If interest is no longer deductible for an individual, filing a schedule E (which is required) won't make it deductible.
When I was preparing Income Tax filings for other people, I was shocked at how many would refuse to itemize. They viewed it as far more labor intensive for them to sign an itemized 1040, as compared to them signing a 1040EZ form. Many people simply do not care about saving money on taxes, they are more concerned with their perception of labor.
You must have worked with some very strange people. In 30+ years of professional tax work, ranging from working with high net worth individuals at a Big 6 firm, to running a VITA program for low income taxpayers, I've never had a client that opted to take the standard deduction when itemizing resulted in a lower overall tax liability.
You must have worked with some very strange people. In 30+ years of professional tax work, ranging from working with high net worth individuals at a Big 6 firm, to running a VITA program for low income taxpayers, I've never had a client that opted to take the standard deduction when itemizing resulted in a lower overall tax liability.
There are obviously all sorts of clients with varying levels of education and sophistication. No huge surprise that some dolts thought they knew better LOL
The 25% down payment requirement for most mortgages is what keeps most people from buying their first home, thereby decreasing demand and keeping the prices lower. When anyone could get a mortgage with 10% down there was a buying frenzy which raised prices, especially as the interest rates got lower.
Is there an artificial inflation of house price because of the deduction allowance for mortgage interest?
I have read that construction cost is down and is one reason why huge McMansions are being built. If the deduction goes away would it bring real estate prices down? isn't that better in final analysis that demand will pick up, and more medium size houses in mid range price, which are now in short supply, will be built?
Of course. The deduction is simply a government subsidy to buy a house, for people that can afford to buy a house (not for all). Therefore, the deduction raises homeownership. Add-in that non-primary residences qualify and the effect doubles.
Real estate prices will go down, because of the reduced incentive to own a 2nd home.
The 25% down payment requirement for most mortgages is what keeps most people from buying their first home, thereby decreasing demand and keeping the prices lower. When anyone could get a mortgage with 10% down there was a buying frenzy which raised prices, especially as the interest rates got lower.
I believe that 25%requirement is not true. People are back to buying first houses with far less.
PMI still holds true and now is for the life of the mortgage not just until you hit 20% equity.
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Not in the wealthy areas--
