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Old 11-16-2017, 10:13 AM
 
698 posts, read 564,853 times
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Quote:
Originally Posted by jiminnm View Post
Only about 30-33% of taxpayers itemize deductions. So, the 70% of taxpayers who take the standard deduction will not be affected. Of the 30-33% who itemize, about 80% (or 25% of taxpayers) utilize the mortgage interest deduction. That usage, by number of taxpayers, breaks down to about 35% below $100K, 43% $100-200K and 22% over $200K. The dollar deductions by income group are 16% below $100K, 39% $100-200K and 45% over $200K. Also, last numbers I saw, 23% of home sales were cash sales. This is a long way from a significant market destabilization.
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?
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Old 11-16-2017, 10:19 AM
 
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Quote:
Originally Posted by VendorDude View Post
I live in a nice neigborhood in a high COL area. Based on recent comps, I should be able to sell my house for $1.2 million. Without the home mortgage interest deduction, the pool of buyers who could afford to pay that much will be significantly reduced. The idea simply tilts the market against current owners. This after all that whining about how the government should not be picking winners and losers.
The most they could deduct currently is interest on $1 million. So cutting the maximum loan amount to $500k and assuming a 4.5% interest rate, that suggests the loss of a $22,500 itemized deduction, which translates to about $9k/year at a 39.6% tax rate.

If that is too much for someone to buy your home, they shouldn't have been buying it in the first place.
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Old 11-16-2017, 10:37 AM
 
26,179 posts, read 21,449,749 times
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Quote:
Originally Posted by VendorDude View Post
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 credit crisis is in no way analogous to the removal of the MID, so I am very sorry to inform you that you have lost
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Old 11-16-2017, 11:09 AM
 
12,022 posts, read 11,509,043 times
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Quote:
Originally Posted by VendorDude View Post
I'd assume large losses for the entirely obvious reason that deductible interest is a very different thing financially from non-deductible interest.
There are a lot of older people with low incomes who are deducting high amounts of mortgage interest to stay in homes that have inflated in value. The previous paper only looks at the percentage of filers. The average home mortgage interest deduction taken by those itemized in 2011 is not that different from 0 to 100K in income.

https://www.fool.com/taxes/2015/02/1...verage-am.aspx

My guess is that there was a lot of refinancing to extract equity since Congress made it more difficult to use bankruptcy to discharge medical debts. The elderly would be a prime target.

You can easily go over the standard deduction with just the real estate tax here. Add in income tax, property tax on cars or investment property, medical expense, etc. and you're over the standard deduction. Notice many on the list are deductions the Republicans want to eliminate.
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Old 11-16-2017, 11:37 AM
 
26,179 posts, read 21,449,749 times
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Originally Posted by lchoro View Post
There are a lot of older people with low incomes who are deducting high amounts of mortgage interest to stay in homes that have inflated in value. The previous paper only looks at the percentage of filers. The average home mortgage interest deduction taken by those itemized in 2011 is not that different from 0 to 100K in income.

https://www.fool.com/taxes/2015/02/1...verage-am.aspx

My guess is that there was a lot of refinancing to extract equity since Congress made it more difficult to use bankruptcy to discharge medical debts. The elderly would be a prime target.

You can easily go over the standard deduction with just the real estate tax here. Add in income tax, property tax on cars or investment property, medical expense, etc. and you're over the standard deduction. Notice many on the list are deductions the Republicans want to eliminate.
Can you easily, and more importantly can most who itemize go over with the proposed doubled standard deduction ?
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Old 11-16-2017, 11:46 AM
 
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Originally Posted by Lowexpectations View Post
Can you easily, and more importantly can most who itemize go over with the proposed doubled standard deduction ?
Notice they're trying to take away those specific deductions so you don't go over the threshold and itemize. Probably many who own a home at that income level have the option to itemize based on the mean deduction amount for mortgage interest. Homeownership varies with income level. The important thing is that the percentage of filers is just a raw number that doesn't take into account whether the deduction pertains to people who own a home.

Last edited by lchoro; 11-16-2017 at 11:56 AM..
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Old 11-16-2017, 11:48 AM
 
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Quote:
Originally Posted by lchoro View Post
Notice they're trying to take away those specific deductions so you don't go over the threshold and itemize. Medical expense deduction is also being targeted along with those named in the post.

I dont think most people who itemize take the medical deduction so please refrain from the red herring if you can
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Old 11-16-2017, 11:55 AM
 
2,741 posts, read 1,763,815 times
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Quote:
Originally Posted by lchoro View Post
My guess is that there was a lot of refinancing to extract equity since Congress made it more difficult to use bankruptcy to discharge medical debts. The elderly would be a prime target.
Interest on a home equity loan is only deductible for $100k, doubt that's putting many people over the current standard deduction. If it is, the increased standard deduction should make up for it.
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Old 11-16-2017, 12:14 PM
 
698 posts, read 564,853 times
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Quote:
Originally Posted by SuiteLiving View Post
The most they could deduct currently is interest on $1 million. So cutting the maximum loan amount to $500k and assuming a 4.5% interest rate, that suggests the loss of a $22,500 itemized deduction, which translates to about $9k/year at a 39.6% tax rate. If that is too much for someone to buy your home, they shouldn't have been buying it in the first place.
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.
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Old 11-16-2017, 12:23 PM
 
698 posts, read 564,853 times
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Quote:
Originally Posted by lchoro View Post
There are a lot of older people who...
There are a lot of people other than those who work at the Motley Fool who know their way around the IRS SOI tables. Most tables are available through the 2015 Tax Year, by the way.

Quote:
Originally Posted by lchoro View Post
My guess is that there was a lot of refinancing to extract equity since Congress made it more difficult to use bankruptcy to discharge medical debts.
What share of refi's has been to access equity and what simply to improve cash-flow? Any idea?
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