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It means he had a loan paying 10k a year in interest (about average) for a conventional loan, owned a house in Bristol for 8 YEARS, paid all that money and can now sell and makes a max of 10k.
See.
That is the most ridiculous theory I have ever heard. Given that you had to pay something to live somewhere you can write off the interest as the rent you would have paid.
Like a lot of people posting in this thread, I feel like I'm missing something. So basically your friend bought a house, had a place to live for eight years, deducted mortgage interest + real estate taxes from his tax return, and the market paid him $10K for that? I don't see the problem here. If he were renting he'd be in the negative by tens of thousands of dollars but he made out by $10K if I understand correctly. So . . . what's the problem?
If someone walked up to me one day and said I'll give you $10K in 8 years and all you have to do is live in this house and maintain it, I would take that deal all day long! People need to stop thinking about their house an ATM machine. It's what got us into this trouble.
I don't understand about how everyone makes a big deal about deducting mortgage interest and taxes. I thought many people don't go over the married standard deduction of $11,600 so you're not getting to deduct that much from the mortgage interest and taxes. Or, if they do go over, not by much unless you're a high earner and have enormous houses.
I don't understand about how everyone makes a big deal about deducting mortgage interest and taxes. I thought many people don't go over the married standard deduction of $11,600 so you're not getting to deduct that much from the mortgage interest and taxes. Or, if they do go over, not by much unless you're a high earner and have enormous houses.
What good is a tax deduction if one does not have the money to spend to get such...LOL
I lived in rentals early on in life. Not something I would care to do again. Even if it costs me a few dollars more, I want the control that owning and living in my home affords me.
I don't understand about how everyone makes a big deal about deducting mortgage interest and taxes. I thought many people don't go over the married standard deduction of $11,600 so you're not getting to deduct that much from the mortgage interest and taxes. Or, if they do go over, not by much unless you're a high earner and have enormous houses.
About 67% of the homes in the U.S. are owner occupied.
About 20% of those homes do not have a mortgage.
About 35% of those filing taxes itemize deductions.
Average mortgage balance is around $170,000 which would put the amount of interest and taxes at about $11,500, (I figured at about 5 years in on a mortgage and 2% property tax rate), add in medical and many other deductions and if a married couple that owns a home with a mortgage is not itemizing it is very likely they are losing out.
About 67% of the homes in the U.S. are owner occupied.
About 20% of those homes do not have a mortgage.
About 35% of those filing taxes itemize deductions.
Average mortgage balance is around $170,000 which would put the amount of interest and taxes at about $11,500, (I figured at about 5 years in on a mortgage and 2% property tax rate), add in medical and many other deductions and if a married couple that owns a home with a mortgage is not itemizing it is very likely they are losing out.
So, 65% of homeowners don't itemize deductions? Even if they do itemize, how much are you going over the standard deductions? It's just that homeowners and realtors always make a big deal about deducting interests and taxes, but I doubt average homeowners are actually getting much out of it.
So, 65% of homeowners don't itemize deductions? Even if they do itemize, how much are you going over the standard deductions? It's just that homeowners and realtors always make a big deal about deducting interests and taxes, but I doubt average homeowners are actually getting much out of it.
If you take in to account the 15+% that are below the poverty line, probably another 10% close to it, college students and other teens that are working and have to file, the number of retirees that are on SSI and own their homes outright you eat up a huge chunk of the 65% that don't itemize and would have no reason to itemize.
It does not mean that it is not a big deduction for a large group. I know single persons that own their own home that have $16000+ in deductions, that is well above the $5,800 standard deduction.
Homeowners would have a reason to make a big deal out of itemizing interest and taxes because it plays a significant role in their tax return. Realtors would be remiss if they did not at least mention the savings that many see, of course any good realtor would also advise them to speak with a tax professional about it and would not state outright that they will see a savings.
If the average homeowner was not getting much out of it then I doubt you would see much press coverage when it is brought up about dropping the deduction. The fact that every time it is mentioned it does get big coverage in the press tells me that it does effect a great many people.
If you have any reasoning, facts, etc. that the average homeowner are, "not getting much out of it", I would like to hear it.
All I'm saying is that the deductions from interests and taxes get overplayed by realtors to buy a home. If average home is $170,000, and if interests and taxes deduction equals to around $11,500, then how much more does a regular person have in deduction? Only times that I've surpassed standard deduction is from moving expenses. I work half of my working hours from home so I get to deduct one of my apartment rooms, and even with that, I don't surpass standard deduction. So, even if I owned a home of about $170,000, I wouldn't have that much to go over the standard deduction. Maybe few thousand dollars. Many of my co-workers who're pro-houses always talk about the tax and interests deduction, probably brain-washed from their realtors or other people, but many of them live in houses around $120,000-$150,000.
I do think that there's a lot of press coverage about dropping the deduction since that has major impact to the rich and to the real estate industry. The rich benefit the most since they tend to live in expensive houses so more to deduct. The real estate industry for obvious reasons.
If you get any. Even with homeownership, in the 9 years I have owned my home, I have itemized exactly 0 times. The standard deduction has been the better deal every time. Yes, really.
I've owned my first home since 2003. I was itemizing my deductions even before getting a home. Only until I got through college was I using standard. Didn't own a home then.
I think there is a lot of logic people are not considering here.
The standard deduction is a static(well, kind of) number... PITI is going to be variable, based on where your house is (price) and how much you finance. Obviously buying a house in the middleofnowhere, Wisconsin for 50k its going to be a bit different than a barelymorethanashack in San Jose that cost 500k. I'd say there's a much greater chance someone will finance more actual $ in a 500k house than a 50k one (the argument here is the bigger the # the bigger the deduction, which plays against the standard deduction being a static number).
Once you reach a certain threshold, you will almost always itemize, much like the income statistics that someone posted earlier. Once you go over 50k, most people itemize.
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