End of the mortgage deduction: effect on Pgh? (Pittsburgh: house, buy)

[UKyank]

The flip side is that you can get a refinance/mortgage now at rates that are so low you can make more by using that money invested elsewhere + get the deduction on top of that with the differences in 15-30 yr interest rates.

[sparrowmint]

While I'm sure there are other factors at play, I don't see why it has to hurt the housing market. There's no such thing as the mortgage deduction in Canada (except for some ultra complicated loopholes that apply to very few people), and Canada has equal, or sometimes higher, rates of home ownership as the United States. Not entirely sure why the government should subsidize home ownership in this way, even to a slight degree. Buying either makes financial sense to you or it doesn't, and that's what the choice to buy should be based on.

On a selfish level, I am happy to see it go if it means other taxes wouldn't have to rise as much. I already pay way more than I'd be paying in Canada at my income level, and I don't have a mortgage.

[clearlyhumanoid]

Mortgage interest tax deduction is a nice way afford to more house than you can otherwise afford, for those higher income folks (around Pittsburgh anyway) where itemized deductions make sense as described above. It was one of the factors in the median home price nationally increasing from a historically rational 3 times yearly income "rule of thumb" affordability, to an insane 5 times yearly income.

[Clint.]

Originally Posted by sparrowmint

While I'm sure there are other factors at play, I don't see why it has to hurt the housing market. There's no such thing as the mortgage deduction in Canada (except for some ultra complicated loopholes that apply to very few people), and Canada has equal, or sometimes higher, rates of home ownership as the United States.

On a selfish level, I am happy to see it go if it means other taxes wouldn't have to rise as much. I already pay way more than I'd be paying in Canada at my income level, and I don't have a mortgage.

Now, now, I'm sure you know what the well deserved response to such talk is: Move to Canada if you like it so much.

I don't see why it has to hurt the housing market, either. What you have to keep in mind when people say things like that is they are primarily considering their own likely circumstances or perhaps preparing a worst case scenario to lend credence to their favored position, regardless of whether the outcome would actualyl be what they think it will be. Politicians love to play with housing policy to satisfy various outspoken consituencies. It's an easy economic question and the answer is to get rid of it.

Maybe I'm just speakign for myself, because my house was nowhere expensive enough to qualify for it. I suspect many others in the region are in the same situation, but are perhaps under represented on this forum. I love situations like this, though, because they reveal how dishonest or at the least unwittingly biased people can be. Some people will harp about Section 8 vouchers, saying the subsidies artificially raise rents, and then turn around and deny that realtors trade on the same spin with the interest deduction and pretend that anticipated benefits are not factored in to housing negotiations thus raising prices.

For anyone interested, several economists of varying political leanings endorse the idea: Planet Money's Fake Presidential Candidate : NPR

About 34 million taxpayers claim the deduction. Average annual savings is $600. Mortgage Interest Deduction Could Be In Play : NPR.

For some people the sky is always falling, especially if the question is taxes. Or religion. Or foreign policy. Or anything they happen to feel strongly about.

[Bong477]

Originally Posted by Velvet Jones

Not really. The way AMT is now my wife and I have hit it the last two years. Trust me, we are not even close to a million. My guess is that AMT will effectively wipe out our mortgage interest deduction this year.

Mortgage interest is generally still deductible even if you have to pay AMT (a big part of why it is so beneficial to the upper end of the middle class).

[UKyank]

I just don't see it happening as it would tick a decent number of voters off with the savings back to the budget being about enough to fund government spending a whopping 14 days. Lots of negative without much upside for vote minded politicians

[robrobrob]

Doesn't do any good to raise taxes without cutting spending. Gotta do both.

Personally, I don't want to see my taxes raised but if there was agreement to raise taxes and to significantly cut spending I am for it. By significantly, I mean way more than has been discussed.

[ferraris]

Originally Posted by robrobrob

Doesn't do any good to raise taxes without cutting spending. Gotta do both.

Personally, I don't want to see my taxes raised but if there was agreement to raise taxes and to significantly cut spending I am for it. By significantly, I mean way more than has been discussed.

Paying more for less is a tough sell.

[Velvet Jones]

Originally Posted by Bong477

Mortgage interest is generally still deductible even if you have to pay AMT (a big part of why it is so beneficial to the upper end of the middle class).

Yes, but the deduction is basically nullified because of AMT. I guess if you remove the mortgage deduction and leave AMT in tactic then that would be a double whammy. Don't worry, I'm sure that is exactly what congress will do. Spending cuts will never happen, ever. If the bozos actually do manage to increase Federal revenue they'll just spend it on whatever favorite pork project they have.

[JoeP]

Taxes for top incomes is at a historic low. We have a serious revenue problem.
The argument was that lower taxes will encourage the top to "create jobs" with all that saved money. Turns out, that's not what happens. We just have more wealth flowing to the top. One can just look at the last decade to see that - even before the crisis, job growth was the worst since the 30's. And more debt for the country and the middle class gets more and more squeezed.... and those that aren't even that fortunate have struggled even more so...

Time to drop AM radio economic policies and work with real world ones.