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Getting rid of it or capping it will mostly effect 2nd homes in popular areas where the wealthy congregate like Aspen and the Hamptons.
Much bigger is the effect of low interest rates.
Vancouver is a silly housing market to compare to anywhere else. Chinese buyers/investors trying to export their wealth beyond reach of the Chinese government have wrecked it. Now because of the rule changes that force them to pay extra, they are moving on to Toronto, Seattle and elsewhere.
It is already capped at $1,000,000 of principal. If you own a second home in Aspen or The Hamptons, You most likely have a primary residence that has already exceeded the cap.
* Cheap mortgage interest rates. People willing to pay more. Rates were much higher when I bought my home (first time buyer) when housing was far cheaper. Got the purchase price locked in albeit at a much higher rate than today. Then refinanced a couple times to get rid of PMI and get a rate that is 1/3rd of my original.
* Areas with high property taxes seem to have cheaper prices on comparable homes of areas that are lower in property tax.
In reality, people are focused on the monthly payment. So I would guess.. yes... deductions do since it contributes to the final cost annually.
I’m curious, do you think that “the wealthy” are somehow getting away with something that they shouldn’t as a result of these rules?
Theire not. People like to get on the “it’s the wealthy who get all the breaks” bandwagon. AFAIK anyone who pays taxes can use the tax code equally and deduct whatever is allowable. If someone doesn’t have that second home to deduct it isn’t the wealthy guys fault. But people like to blame the wealthy as they are “unfairly getting away with it”
I deduct my rentals. But why shouldn’t I? I took the risks, put up the money. Oh yeah just like anyone else in the country can. ......
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.
What I have a sense for is the desperation inherent in your post. It too is significant.
Last edited by VendorDude; 11-17-2017 at 05:44 AM..
...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.
In the real world, using the tax code to encourage socially beneficial behavior and discourage that which is socially destructive is part and parcel of what a representative government is all about.
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.
The facts here are that you give no indication of understanding markets and how or why housing markets in particular were affected in 2006 and thereafter or would be again if the home mortgage interest deduction were eliminated.
PMI still holds true and now is for the life of the mortgage not just until you hit 20% equity.
Under the Homeowner's Protection Act, your mortgage lender is legally required to cancel your PMI coverage once you pay down your mortgage to 78% of the principal, as long as you are current on your payments and do not have an FHA loan.
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