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Home mortgage interest deduction is at risk?
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Anonymous
Sure, but we don't live in a democracy. We live in a republic that is rigged to give rural interests a completely outsized share of representation. So "the Dakotas" get twice as many senators as California, etc.. |
Anonymous
What does that mean? Housing prices are high enough that rich and middle class people need a subsidy from Uncle Sam? Woe is us. |
Anonymous
OMG you are screwed if this is true. You have to pay the higher. Seriously check your tax returns, because the AMT is supposed to prevent you from getting too many deductions. |
Anonymous
| Oh god I hope they get rid of it!! We need to get government out of the housing market. They need to get rid of Fannie and Freddie too. |
Anonymous
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First, let's stop kidding ourselves this is a break for the middle class.
It's a break for the DMV, NY metro, and other large metro areas' upper middle class -- seeing as the deduction on a home worth $600k is 3x the deduction of a home worth $200k (which is pretty solid middle class for most of the country.) Maybe we can phase out mortgage deduction at a lower plateau, like student loan interest is phased out for the over $100k crowd. Sorry, we're all going to have to make sacrifices. It sucks, but there's only so many hedge fund managers out there. Sooner or later, actual people have to see their taxes go up. |
Anonymous
| I think if the mortgage deduction was eliminated, fewer people would purchase homes. I am not talking about individuals who are not qualified to purchase. Individuals who are qualified would see less advantages, if any, to home ownership. What would that do to the housing market. |
Anonymous
If dropping the deduction discouraged buyers, it would presumably be because they could not afford the payments. But there are two sellers who could affect that, the home owner, who could lower the price of the house, and the lender, who could lower the interest rate. Wouldn't supply-demand cause one or both of those to occur to keep the market from drying up? I'm not an unquestioning believer that an open market cures all ills, but I do believe that it has an effect. |
Anonymous
| Many current homeowners may be stuck. It is possible that they may be unable to lower the price of the house too much without incurring a loss. As for the second alternative, are not bank rates linked to the national prime. If so, banks are limited to how low they can reduce interest rates. I do believe that if the deduction is removed, more houses will go on the market, infusing an already overexposed market. The new houses on the market will come from people who purchased their home with the deduction calculated in financing. |
Anonymous
but seeing your tax rates go to Clinton-era levels is one thing. Seeing your true monthly mortgage go from $3,000 to $4,000 a month is a disaster for many. No chance this passes. It would be much less painful and more political viable to raise the medicare age, change the SS inflation index, and even raise tax rates, than to do this. The only thing I can see if lowering the threshold from $1M to something more reasonable ($750K?). |
Anonymous
I'm not sure screwed is the term - but if this is the case I would reach out to a tax accountant for how to best fix. |
Anonymous
30 year mortgages track the 10 year treasury. |
Anonymous
The deductible mortgage interest is linked to tax-free T-notes. If the deductibility were changed, it would make sense to change the linkage. The major policy issue is whether the government subsidizes home ownership. Once that is decided, then come the implementation details. |
Anonymous
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High income earners already have two problems: AMT and that your deductions are phased out even before you get to AMT. So all deductions - mortgage interest, charitable giving, etc. - are already limited for high income earners. This is on top of the mortgage limit that already exists, which is that you can't deduct the interest on the part of a mortgage that is over $1 million. There is a complicated formula to figure out the mortgage deduction you are allowed to have, which then gets cut for high earners after that along with all the other deductions, who then get whacked by the AMT.
My point is not to cry about this. It is a nice problem to have. But I mention it because I do agree this hurts the middle class more than anybody. My deduciton is already limited, so the idea that the deduction helps rich people the most is simply not correct. There are a million ways to raise taxes and close loopholes. I am not sure why this particular one is a good idea over, say, people like me who should pay a higher rate, or the jet owners Obama was talking about, or the hedge fund managers or anything else. What's next? Lose the deduciton for charitable contributions? On one level I think all deductions are bad policy because they don't necessarily encourage behavior they seek to encourage. I'm not sure, though, why this particular one is being singled out. |
Anonymous
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Problem is, AMT doesn't hit the "wealthy" anymore. It is a much more purvasive tax than anything envisioned when first enacted. It needs to be indexed, but the pigs at the trough can get enough of the money given to the Treasury to index it properly.
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Anonymous
Pretty amusing: given that hedge fund managers have an artificially low tax rate on their earnings. Your average middle-class NoVa resident probably pays a higher rate than the most successful hedge fund manager. So they're not even paying their fair share, much less getting soaked as you imply. As far as eliminating the home mortgage deduction, this would be political suicide on par with eliminating Medicare. It's pure fantasy. Never going to happen. If any party was dumb enough to do so, they'd be eviscerated at the polls. |