Divisive Issue: The Mortgage Interest Deduction

[dawg]

If we make the same income, except I rent and you pay a mortgage, then why should your taxes be lower than mine?

Likewise, if we make the same income, except I pay a $100,000 mortgage and you pay a $300,000 mortage, then why should your taxes be lower than mine.

This is a thought exercise and not an attack on the mortgage deduction. If anything, I would be in favor of additional deductions for rent, or some kind of equalization deduction for people who have made more responsible home choices, rather than taking the deduction away from those who are currently receiveing it. It's just that I see people who are living beyond their means getting a tax break sometimes, while the thrifty pay up to Uncle Sam. Your thoughts?

[closeupready]

1. The mortgage interest deduction makes NO sense.

n/t

[MindandSoul]

6. I kind of agree. . .especially when people buy million dollars home!

Now, I could see a mortgage deduction up to a "median price of housing" in adjusted to each State (i.e., price of housing is so much higher in California than in Arizona. . .there should be an adjustment),but certainly not unlimited mortgage deduction for people selecting to carry a $800,000 mortage!

[prole_for_peace]

36. The deduction does have limits but unfortunately

it is only limited on mortgages with a balance over $1,000,000.

I have a few clients that it is limted on. They bought multmillion dollar houses and then complain with the deduction is limited because they spent all their money on the house and don't have enough to pay their income taxes.

[MindandSoul]

69. OHHHHH! I feel so sorry for them!!! NOT!

[SoCalDem]

46. It just needs to be "upper-limited"

and limited to ONE home...where you LIVE.

It could also be indexed to your income.. For instance:

Make over 250K (Adjusted-gross)..no deduction


The "youngsters" here probably don't know that once upon a time ALL interest paid was deductible. Interest EARNED was/IS taxable, so in fairness, interest PAID was also deductible.. St. Ronnie ended that:(

It was a "stimulus" to get people to finance cars, homes, etc.

[MindandSoul]

70. I agree! Another "tax break" that doesn't exist in European "social democracies"

[closeupready]

143. Oh, yeah, I remember that - interest on credit cards being a big one he ended.

n/t

[TwilightGardener]

2. I'm sorry, are you trying to say that renting is a "more responsible home choice"?

Or that renters are thrifty, and homeowners are all living beyond their means?

[dawg]

11. The *more responsible* part referred to the lower mortgage ...

income being the same, and all. As for renting versus purchasing, it depends on the prices, rents and circumstances. It isn't *always* more responsible to be a homeowner.

But that really isn't the point I was trying to make. My question is, why tax people differently based on their choice of housing, other things being equal.

[TwilightGardener]

25. Well, why should a guy who owns a double wide and a half-acre pay the same

in property taxes as the guy next door who owns a ten-acre estate with a guest house? People get taxed differently all the time. Life is unfair. As to the mortgage interest deduction, if you don't agree that homeownership offers benefits to a community that renting doesn't, that is up to you--but I think it's good to cut homeowners a little slack. They have more at stake than renters in terms of maintenance, pride in upkeep, and in creating a nice, stable community.

[JuniperLea]

50. Who would you consider the more responsible retiree?

The one who rented all their lives and now faces constantly rising rents? Or the person who paid off their home, or has a mortgage amount that was fixed 30 years prior?

You really need to broaden your view on this issue.

[dawg]

140. The more responsible one is the one who ...

had the smaller mortgage and paid it off. When I used the word responsible, I wasn't comparing renting to buying. (Although there are some situations when it *actually* is more responsible to rent.) I was comparing a homeowner with a modest home and mortgage to one who was living beyond their means.

Also, please note that the homeowner who has paid off his mortage will now have the privilege of paying higher taxes than the homeowner who did not.

[gkhouston]

161. Not likely, at least not where I live. Local property taxes are steep, but seniors

get significant exemptions. And remember, you're deducting interest on money you've had to pay, so the seniors haven't had to pay out the money in the first place, either. Given the choice between having my house paid off and not being able to claim the deduction or still having a mortgage but getting the mortgage interest deduction, I know which one I'd take in a heartbeat.

[Yavin4]

Yes, I'm Saying That

Renters are indeed thrifty. And most homeowners DO live beyond their means because they get this subsidy from the government.

[TwilightGardener]

30. That's some crazy generalizing, right there. People rent and own

for a variety of reasons--I have no idea where you come up with your assertion that MOST homeowners live beyond their means--that's silly. And the mortgage interest deduction played no role in my decision to own a home, but for other people, it may play a bigger role.

[enlightenment]

39. You're making some pretty broad generalizations, also.

You've arbitrarily decided that most renters are scumbags who live like slobs and lower your property values.

Nice.

[TwilightGardener]

42. Yes, I believe "scumbags" and "slobs" were the exact words I used

to describe renters...:crazy:

[lumberjack_jeff]

75. False.

All things considered, homeownership is cheaper in the long run.

Your landlord gets an even bigger subsidy from the government.

[Yavin4]

19. Yes, I'm Saying That

Renters are indeed thrifty. And most homeowners DO live beyond their means because they get this subsidy from the government.

[ohheckyeah]

80. Oh horsecrap.

We didn't buy above our means. And my mortgage doesn't go up every year like most rents do.

[alarimer]

55. Whatever costs less is the responsible thing.

People have for years bought more house than they could afford. Now there are a lot of reasons for the mortgage bubble and most of the blame lies at the feet of corporations and not the poor idiots who believed that home values could go nowhere buy up.

We have all been indoctrinated into this myth that everyone should own a home. Why should they? It's led to endless ugly suburbs and mile after mile of hideous sprawl. Why the hell does everyone think they are entitled to 3000 square feet of living space? It is ghastly and obscene.

[sinkingfeeling]

3. The same can be asked about each allowable deduction. I'm single and have no kids and often

feel like I'm subsidizing people that have them.

[MindandSoul]

5. I can kind of sympathize with you. . .however, kids cost a lot of money to raise

And THEY will be paying your social security!

[sinkingfeeling]

9. They only cost money to raise if one elects to have them.

[JoePhilly]

17. You ignored the point of the prior responder.

I have three kids ... they will help pay for YOUR social security.

Your kids will not be doing the same for me.

Using your logic, my kids should not be funding your retirement years.

The reality that you seem to miss is that for any single policy, only some of us benefit. If you only support policies where we all benefit equally at all times ... then the game is over.

[MindandSoul]

72. Absolutely! For exemple. . .the poor do not benefit from the subsidies given to the airports. .

Then never have a chance to purchase an airline ticket!

[Gormy Cuss]

77. And the childless in your community are paying for public schools for your children

...not looking to pick a fight here but your argument is just as full of holes as the single who thinks it's unfair that people with children get deductions.
I do agree with your final statement, with one change: For any single policy only some of us benefit directly.

The indirect benefits, like a better educated workforce in the case of schools, is why we should support policies that don't have a personal payout.

[MindandSoul]

81. And it is the most educated children who will be able to fend for themselves

and hold a job that will pay enough to provide FULL contribution to YOUR social security!

What do you want? You would like America's median age to go up to 55??? or eventually 65???? Then. . . who will pay for your nursing home?

[Gormy Cuss]

86. No one will be paying for my nursing home. By the time I need one, elders will be set off in boats

or dropped deep in the woods because no one wants to pay for a civilized society anymore.

[MindandSoul]

88. Well, you may be right there. . .ESPECIALLY if you haven't build up an emotional, trusting, two way

commitment with your children and your grand children!

I do agree that for many people the right decision is to not have children. . .(sometime I wonder myself, although I have two step sons, one son, and one adopted daughter), but it is obvious that if you have not "given" you may never "receive!"

[Gormy Cuss]

92. Wait -- I thought YOUR kids were paying for my social security????

Just kidding. :hi:

[MindandSoul]

93. Actually, it will be my grand kids, I think! LOL!

[PurityOfEssence]

113. Then you deserve no help from first responders who are younger than you

When you're having a heart attack on the sidewalk in your eighties, my strapping kids that I've invested great care, time and money in raising shouldn't lift a finger for you. Sadly, we've raised them well enough so they'll drop everything and do all they can to save you.

There's a selfishness to having children, and there's a selfishness to not having them. We are at least making an investment in society's future, and there may very well come a time when your very existence is dependent upon those of us who made the effort.

This kind of "why should I...?" crypto-libertarian selfishness if more fitting for conservatives, but times like this remind me that reactionaries aren't the only group with inherent selfishness.

[sinkingfeeling]

136. I stated that any deduction can be argued for or against by those that it is 'helping' or by those

that cannot recieve the benefit. I pay taxes for your kids education and higher income taxes than 'married couples with children'. I recreated myself by having a single child, declining to add to overpopulation of the world. By 'child' is now over 40 years old. You do realize that all those child care credits and deductions end when the kids grow up?

The OP stated that home owner deductions should be eliminated because a similar break isn't granted to renters. I said that you can argue about all deductions and used not having kids as an example. The response to me was that it costs a lot of money to have kids. My reply was factual.

Now if I'm so terrible because I think people should pay for the expenses of their choosing to have kids, so be it. I paid for my child.

[exboyfil]

15. Interesting question

Why encourage birth rate through the child tax credit? My belief as to why it was put in was to do just that - encourage folks to have children. With immigration and the higher birth rates from immigrants is there really any reason to encourage everyone to have more children?

On the flip side will the bonds of citizenship exist in the future as these immigrants who have parents and families of their own wonder why so much of their withholdings are going to prior generations with which they do not have any blood or a recent cultural link.

[Progressive_In_NC]

141. seriously? My kids cost WAY more than the 1,000 a year I can claim on my taxes

probably 10 times more each per year to feed, clothe, provide living space, healthcare and education for. The $1,000 I can get back in taxes I've paid in doesn't even start. It wouldn't encourage any one person to have a child, or maybe I should say I hope it doesn't.

[exboyfil]

148. It is not an either or thing

It is an incentive. Kind of like Cash for Clunkers. If you read the justification for it and other proposals over the years from other countries, this technique is used as justification for increasing birth rates. It is probably too little to have much impact, but it does have some impact when you consider it from a macro scale. Marginally each child costs less than the first (health insurance premiums do not go up for more children, if deductible is achieved without the additional child - then actual health care does not go up that much, additional shelter costs less per unit once initial expenditure is done, lots of fixed costs do not change with addition of another child, hand me down clothes reduces cost of next child in some cases, food preparation is marginally more (little additional time investment), etc).

[Hosnon]

18. Owning a home requires many additional expenses that renting does not. nt.

[MindandSoul]

76. I agree. We own our home, (with a mortgage) and also 4 rental properties (with no mortgages)

I can tell you that the return on rental, once all the "expenses" are taken into account (taxes, insurances, repairs, months without tenants, utilities, etc. .) the return is no more than 3 to 4% a year, AND. ..if you sell it you pay BIG taxes on depreciation and "profit!" (if you get any profit!).

So. . .if some of us didn't own homes. . .the rental rate would go up dramatically since there would be much fewer rentals available! And only the very wealthy would control the rental market. . .and you know where that leads. . .basically slavery if you want to keep a roof over your head!

[SoCalDem]

78. adn until recently one had to put down a significant amount of their own money

when they bought a home..

renters pay a deposit and if they are careful tenants they get all/most of it back when they move.

they also do not pay additional out-of-pocket taxes or insurance on the living space.

[Le Taz Hot]

129. Oh yes it does.

And something that most people have forgotten -- St. Ronnie ELIMINATED a WHOLE LOT of home owner deductions, such as the deductions for home improvements. I remember re-doing a couple of rooms back then and I was able to deduct a good portion of my materials. The idea, of course, was that home improvement increased the value of your home as well as your neighborhood which, upon assessment, increased tax revenue. That's still true, of course, but we no longer enjoy the deductions.

[Hello_Kitty]

170. $1000 tax credit per child for people making up to $110K a year is excessive

It's costing us a lot of money and it's going to a lot of people who don't need it.

[Yavin4]

23. The Difference Is We Were All Once Children

And the adult taxpayers back then funded our education, healthcare, etc. So now that we're tax paying adults, we have to give back.

Owning a home is a government subsidized investment.

[pnwmom]

4. The purpose is to encourage home ownership, which for many people

has been the primary way they accumulate some net worth over their lifetime -- sort of a long term saving program.

Neighborhoods populated by homeowners also tend to be more stable, which has some advantages for the inhabitants, particularly children. So it has been the policy ever since the Depression, if not before, to encourage home ownership.

[gratuitous]

26. That's part of it

There are all kinds of wrinkles in the tax code to encourage some behavior and discourage other behavior. Home mortgage deductions and dependent deductions are two of those, that have the (seemingly) salutary effect of making home ownership or having children a more attractive lifestyle choice. I don't think anyone buys a home solely for the deduction, and I don't know anyone who had children just so they could knock a few bucks off their 1040.

Is this being ginned up as a potential wedge issue? Who's to say? There have been any number of bogus wedges in the past 20 or 30 years, things I wouldn't expect too many people to fall for, but that have nevertheless worked to distract the electorate.

Home ownership makes for more stable, more livable communities, provides a dependable tax base, and localizes the need for provision of services. If the home mortgage deduction needs to be adjusted so as to bring in more revenue, why not cap the deduction at something like $10,000? Or, if this is unpalatable, allow for full deduction of mortgage interest on one home, half that on a second home, and none on third and subsequent homes. This will have very little effect, really, on the multi-domiciled affluent, bring in more revenue, and leave practically every other homeowner untouched.

[Yavin4]

28. There Are Other Ways of Accumulating Wealth

Also, saying that neighborhoods with more renters are not stable is patently absurd. Large metro areas like NY, Philly, SF, Chicago are predominantely renters, and they're stable places to live.

The tax is a sop to the home builder trade, nothing more, nothing less. It encourages an industry which does not lead to any more productive industries, and traps the workers in that industry into boom and bust cycles.

For example, let's say that the government subsidized clean energy research or alternative fuels. Doing this woul generate better, more stable jobs over the long haul, and it would lead to the creation of entire new industries and new ways of making products.

[CreekDog]

87. I bought because I COULD NOT get a rental

and the rents were rising faster than my income.

i had excellent credit, good job, a good rental history, but as a single, male in his 20s, was repeatedly turned down for rentals.

so i bought and that froze the cost of my monthly housing payment and over time, my housing has become cheaper than those who rent (even when you consider non-mortgage expenses).

[pnwmom]

102. Good point. Buying can freeze most of your costs, if you have a fixed

payment. And we have had the same experience of our monthly payment, over time, becoming significantly less than what it would cost to rent.

[pnwmom]

101. No, it isn't "patently absurd." Neighborhoods that are predominately

rentals are not AS stable as neighborhoods in which people generally own their own homes. It is much harder to buy or sell a house than it is to sign a lease or leave a rental, and that means that home owners are generally more committed to staying in their homes.

[JuniperLea]

49. Plus... if you pay off your home, or you have a mortgage payment amount...

That was fixed 30 years prior, you'll be paying a LOT less for housing when you retire. Renting just won't be an option for most of us on fixed incomes.

[shanti]

110. long term savings program

well, it worked for my parents, but everyone else got screwed.

[exboyfil]

7. Kill it

It would make my taxes much simpler (itemize every two years and batch giving in itemized year).

It is one of those selling points that realtors use to get you into more home than you should be in. Nobody ever starts with the standard deduction base when calculating the actual tax savings from itemizing interest and real estate taxes like they should. If you do, then you find it really does not amount to as much as you think.

It is one of the many things in the tax code put in to drive behaviors. Given the real estate melt down, it was something that should not have been there.

On the flip side, if we expect appreciation to dig us out of some of this hole, then this change now may be ill advised.

[pnwmom]

103. Given the real estate meltdown, it will just make a bad situation worse. nt

[hughee99]

8. In some states, you can deduct some of your rent from your state taxes.

I'd support allowing this on a federal level as well. As for the mortgage interest deduction, if you want to create incentives for home ownership, I think we should keep it.

[JoePhilly]

10. I'll join the thought exercise ...

The cost of owning a home is generally well above the reach of the average American, out of pocket. That is, by the time you could afford to buy a house with CASH, you are almost dead.

However, if you do own your home, you are able to save, invest, pay for college, etc. The result is that for many Americans, their "wealth" is their home (or home equity). They can pass it to their children.

When you rent, you can't. The original tax break on mortgage was intended to help people afford a home, over time, so they could pass it on (or its equity on). Your loan has interest, but your tax break helps cut that cost. You can build some wealth over time.

When you rent, you are at the mercy of the renter. You can't decorate, you can't expand, you can't XYZ ... without permission. When you own the house, you get to decide what you want to do in all of these areas.

As for why "owners" get tax breaks and "renters" do not ... consider that the renter does not have to pay for ANY general maintenance of that property. If the water heater dies, who pays? A leak? So on.

Renters don't get the tax break because, generally speaking, they can walk away ... the "owners" can't walk away.

If you can't just walk, you get a break.

[Yavin4]

29. Homeowners Can't Walk Away?

Have you read the news in the last three years?

[NutmegYankee]

32. Most states have a penalty.

You get hit with the difference between what the house was bought for and what the bank got for it as well as the taxes from the ordeal. Add to that the impact on credit and you may be unable to even rent an apt due to credit checks.

[JoePhilly]

37. Your statement is sarcastic, right?

Sure, if you lose your job and have no income, and can't find a job, maybe you end up with no other choice. But realistically, almost NO ONE sees that choice as their preferred option otherwise.

And ... those who "walk away", are not really better off.

In short ... its not an approach that really helps increase your net worth.

[Yavin4]

47. There Are Homeowners Who Have Walked Away from their Mortgage

because they're under water. They can pay the mortgage but the value of the home is less than what they paid for it. So, they walk away.

[JoePhilly]

119. Ensuring they will never get another loan ever again.

The phase used ... "walk away" ... is misleading.

Take a look around your house. Now imagine what it would cost you to MOVE that stuff, whatever it is. That's a cost of "walking away" too. Or I guess you can leave much of your stuff, or sell it in a garage sale.

[kelly1mm]

172. Funny, I don't see many people walking away from "underwater" cars.

Wonder why that is???

[bettyellen]

52. and if you need to go to a nursing home, poof they take your home IF you have one...

so some of us can;t bank on getting to keep our home- unless we cheat the system.

[Dreamer Tatum]

12. Just cap it

that would prevent people from over-borrowing, anyway.

[mmonk]

13. It encourages home buying (and construction).

However, voo doo economics with the lack of regulations has screwed that up now.

[Better Believe It]

14. It won't hurt the filthy rich much and proponents see it as a way to divide renters and home buyers

which serves the rulers goal of increasing taxes for millions of working people paying a mortgage under the guise of "fairness".

Is anyone proposing a "renters" tax credit in the interest of "fairness"?

No.

So that pretty much says it all.

And how many multi-millionaires and billionaires in the top 1/10th of 1 percent have a 30 year mortgage on their mansions?

None.

They pay fricken cash!

[Poboy]

21. Here is your answer right here. -nt

[dawg]

118. I mentioned being in favor of a tax break for renters in the OP.

Not that it would have any chance of passing with Congress the way it is today, but that was one of my reasons for starting this thread - to get people thinking about ideas like that.

[ProgressiveProfessor]

16. I have not seen any real effort to eliminate it

Those have mondo mortgages are also in Alternative Minimum Tax country. So some of that gets addressed there.

[aquamarina]

20. The "mortgage deduction" is a deduction

on the interest paid on the mortgage, not the principal, i.e. the cost of borrowing money. This gives the borrower a break from having to pay taxes on what they paid to borrow the money. For example, if I borrow $100,000 at 4% interest 30 years, I will actually have to pay back $171,871. The cost to borrow is $71,871. The mortgage decution simply allows the borrower to not have to pay taxes on the $71,871. If the deduction were to go away, the borrower would in effect be paying twice - (1) paying interest on the cost of borrowing the money and (2) paying taxes on the income used to make the interest payment.

You can argue if this is good or bad but one of the best incentives for buying is the mortgage deduction. Take that away and the entire housing landscape in this country would change. Only the uber wealthy would be able to afford homes and the rest of us peasents would be subject to the insecurity of rental properties.

Now I'm no fan of the mortgage mess we are in but I have no desire ever to move back into a rental unit.

[End Of The Road]

40. +10

[Odin2005]

22. We should not be subsidizing suburban sprawl.

[Better Believe It]

27. So you would only eliminate the deduction for home buyers who live in suburbs.

How would you implement that geographical tax?

And don't try to drive people out of their homes simply because you a renter and have bug up your behind about working class home buyers.

That attitude fits nicely into the game plan designed to divide and create harmful and unnecessary conflict between working people who rent and those who buy.

I'm a renter.

I'm not going to fall for that divisive bull shit.

Assuming you're a renter, would you like and support a renters tax deduction or would you rather just take away the mortgage deduction?

[uncommon]

122. Barf.

[Skidmore]

179. Oh, yeah, let's just all huddle in the

mass of misery that the cities offer. Pile on and then we can whine about high rents and lack of services and parking and ...

[dawg]

24. Building *equity* while renting.

If my rent is $800 per month and your house payment is $1200 per month, you may be building equity - but then again, ask anyone who bought a home five years ago about that. I, on the other hand, am able to save money and purchase investments that I don't live in. Why should the tax code favor one approach and not the other?

As for upkeep, maintenance, etc. - renters ultimately pay for these things just like owners. It is reflected in the rent. Landlords are not in business to lose money.

(Full disclosure - I don't really rent. I own my own home.)

To me, the best argument in favor of the deduction is that homeowners may tend to make for more stable neighborhoods, therefore promoting homeownership could have societal benefits of some sort. OTOH, I also believe that the deduction has been partially to blame for people buying more house than they could really afford, leading to inflated housing prices and the corresponding bubble. Not the cause of the bubble, but a small part in making it worse.

Lots to think about on this issue.

[dawg]

31. One more thing to throw out there ....

most families with average incomes and modest homes do *not* pay enough interest to claim the mortage deduction in the first place. The standard deduction is more, and they never receive any benefit from this provision at all.

Mortgage deduction is mostly an *upper* middle-class benefit.

[WolverineDG]

35. "Most" families are that close to paying off their home notes?

Don't think so. That's just about the only time someone with an "average" income in a "modest" home isn't eligible to take the deduction.

For the record, I'm single, bought my very modest house almost 10 years ago (30 yr note, fixed rate), & can take the deduction.

dg

[Tesha]

104. I think that's nonsense.

Because your property taxes are also deductible, most people who
own a house and have a mortgage are well into the territory where
itemizing pays off. (And IIRC, this is especially true if you pay any
state income taxes.) Personal property taxes (as many states or
localities charge each year for automobiles) also count.

Tesha

[WolverineDG]

33. Why? Because it's better public policy to have people in their own homes

not rentals.

And renters don't have to pay for maintenance or repairs to their apartments (unless they do the damage).

I just love it when those who don't own homes want to stick it to those of us who do.

dg

[Yavin4]

38. Actually, It's Not Better Public Policy. In Fact, It's Bad Policy.

Encouraging home ownership does nothing to advance the overall economy forward. It encourages suburban sprawl and long distance commutes which harm our environment and makes us more dependent on fossil fuels. It encourages rank speculation which is the prime reason why we're in a financial collapse. It encourages mass consumption which is the reason why we've become the consumption nation instead of a production nation.

On a social level, it allows us to isolate ourselves into non-diverse communities which is why we're so politically polarized on every issue. We never get to know one another because we will live in these little boxes on the hillside, sit in our cars for 2 hour commutes while listening to hacks like Rush Limbaugh and Glen Beck on the radio.

[WolverineDG]

41. So your solution would be to force everyone to live in government apartments

for their own good? :crazy:

Sorry, no. Private homeownership is a goal we should work towards, instead of having real estate owned by a few while the rest of us pay rent through the nose for property we have no pwnership interest in.

dg

[Yavin4]

44. No, My Solution Is Remove The Government Subsidy Entirely

If you want to own a home, by all means do so. However, you should be on the hook to pay for it. No Fannie Mae. No Freddie Mac. No FHA. No mortgage deductions.

Government subsidy of home owners is wasteful, non-productive spending whose benefits are really limited to hand full of Americans.

[Better Believe It]

56. So you want to put the financial squeeze on home buyers because you rent?

"benefits are really limited to hand full of Americans."

So that would be what .... about 5 home buyers?

What nonsense!

Are you also opposed to a renters federal tax credit?

By the way, I rent and won't buy any of that divisive bull shit designed to turn working class renters against working class home buyers.

[WolverineDG]

95. Then goodbye Section 8 & all public housing too

If I can't get a "subsidy" (don't know what the fuck you mean by that since I actually have to PAY the interest) for owning my home I work my ass off for, then there should be no government housing for renters who are also wasteful & non-productive either.

You want to make sure real estate is concentrated in a handful of Americans? Take away the home mortgage interest deduction.

dg

[Gormy Cuss]

106. That handful comprises two thirds of households.

Only one third of households are renters.

The bigger issue for renters is that 1)there isn't enough housing stock for low income households and 2)too many renters pay more than 30% of their income for rent.

[uncommon]

125. Too many home"owners" pay more than 30% of their income to their mortgage.

I believe purchasing a home is a perfectly reasonable choice as long as a person has the means, but the reason "too many renters pay more than 30% of their income for rent" is because a LOT of renters are either young or poor.

When I was young and poor, I was lucky if I made $250/week. Sharing an apartment with 1 or 2 other people and trying to make rent and utilities was a nightmare.

Now I am slightly older and not poor and I pay about 20% of my income to rent and utilities combined. I have clients who come in every day to file for bankruptcy who are paying 30%+ of their combined household income toward their mortgage.

[Gormy Cuss]

150. Yes, the rent % is a function of income.

Hence my listing of too few units for low income people as the number one issue for renters.

As for homeowners paying more than 30% of their income for mortgage-related costs, that is one of the consequences of mortgage lenders loosening standards after the move to securitized mortgages rather than portfolio lending and these days it's also the consequence of one or more incomes in a household taking a nosedive.

[PVnRT]

159. Good way to create a landed aristocracy

But, hey, that's better than people getting things that you don't get, right?

[bettyellen]

123. that's not practical in NYC or San Francisco, and the poor to barely middle class

end up subsudusung the wealther home owners. It's not fair. Policy that woks for the suburbs doesn;t work for the whole country.

[uncommon]

124. And renting an apartment in a neighborhood doesn't allows us to isolate outselves into non-diverse

communities? Give me a fucking break. Go to Chinatown or the North End of Boston or Southy or any other community with a strong ethnic/racial identity and tell me no one is renting.

This is a bullshit argument.

[Luciferous]

166. While I agree with you that it might be better public policy, it's

simply not true that renters don't have to pay for maintenance or repairs- security deposits are used for damage and maintenance is included in the rental cost.

[Rabrrrrrr]

34. It's another way for the rich to fuck the poor. They didn't have the balls to make it a renter's tax

so they made it a homeowner's tax cut.

[uncommon]

126. That doesn't make sense to me. Someone owns the building I rent an apartment in -

if their costs are down, my costs are down.

I'm sure it doesn't work that way all the time, but I can say that I pay a very reasonable price for a very nice rental.

[BlueCheese]

43. Whether it's good or not...

... it's radioactive now. There's no way anyone could propose doing away with the deduction without committing political suicide.

[Yavin4]

45. Because The Benficiaries of the Deduction Are White Middle Class Americans

and they only support those government policies that benefit mostly them.

[BlueCheese]

53. No, because the benficiaries...

... are homeowners of all income levels and all races.

[Better Believe It]

59. So Black people and Latinos don't buy homes! Thanks for the info.

Guess you never heard of much less visited any Black or Latino working class communities mainly made up of home buyers.

You're just joking now, right?

[JuniperLea]

60. Tell that to my Black, Latino, Pacific Islander and Asian neighbors...

The individual owners of my townhome complex are mostly everything else rather than white. I'm the minority. Out of 50 homes, only four of us are white...

[Better Believe It]

62. Well, we can't let your facts get in the way of racial stereotyping!

[JuniperLea]

67. Jesus God...

WTF are people thinking? Do they not see their own bigotry or something? :banghead:

I'm just speachless... and for me, that's really saying something.

[Yavin4]

73. In Your Particular Neighborhood, But Not The Nation

The percentage of White middle class home owners is higher than any other groups' home ownership.

[Better Believe It]

96. And therefore we should ignore the millions of non-white home buyers.

And you also find something objectionable with white working class home owners getting a tax break!

[Better Believe It]

66. And "political suicide" means they'll more on to greater riches by becoming a lobbyist for

Wall Street or corporate America!

Hell, if the payoff is big enough they work like hell for ending the deduction!

[JuniperLea]

48. If you don't own a home, you are out on a limb when you retire...

Preferably, you've owned your home for a while and you've paid it off by the time you retire. If not, you are pretty much screwed. Rising rents will eat up all your income.

Owning a home is the responsible thing to do... for everyone that can own.

Renting should be considered a last option for any fiscally responsible person.

[Rabrrrrrr]

54. Wow - that's one of the most ignorant and offensive things I've read here in a long time.

Congratulations!

[JuniperLea]

57. Care to explain your insult?

How is it ignorant? Please?

[Rabrrrrrr]

65. it's ignorant because of the sweeping, non-rational generalizations.

Such as saying that you're screwed in retirement if you don't own a home, or that fiscally responsible people only own homes, and pretty much everything else you said.

I know there's a strong meme in this country that home ownership is the path to financial solvency in perpetuity, but that's a fiction. Sometimes it is, sometimes it isn't.

There's a FAR bigger picture of reality than the simple one you offer.

Unless you care to defend how you can conclude that all non-homeowners are ipso ruined upon retirement, or that "fiscally responsible" is defined by home ownership. If you can, I'll buy your premises. I'll buy them happily.

But I don't think you (nor anyone; this is meant as no insult on your abilities) can.

[JuniperLea]

79. I have already explained

I'll break it down into pea sized bits so you can understand.

When you retire, you live on a fixed income.

If your home is paid for, all you need to worry about is upkeep and prop taxes, which will be a lot less than renting.

Rents go up all the time; unless you have a crystal ball, you will have no idea what your housing costs will be long term.

But forget all that. Clearly you know a lot more than my tax accountant and money manager.

You can keep your fucking insults and ridiculousness to yourself.

[Rabrrrrrr]

90. Ah, so you went from sweeping, untrue generalizations

to some truthful and nuanced specifics. This last post of yours is much more informed and honest than your first one.

I'm still curious as to how non-homeownership implies ipso facto fiscal irresponsibility. But I'm glad you seem to have backed off from that and the other silliness you offered before.

[uncommon]

130. It doesn't.

But home ownership is generally a safer path over the long term. I wouldn't call it fiscally irresponsible to rent rather than buy since many people do not have the means to own. Others may have the means but prefer to take advantage of other investment opportunities.

[JuniperLea]

152. I'm saying if you can buy, you should buy...

Because it's the fiscally responsible fucking thing to do... people are talking about renting though they can buy, and saying that's the responsible thing to do. Which is bullshit. Can no one follow a fucking conversation anymore? Why would I need to reiterate so many fucking times when a conversation already includes all this and all one need do is actually fucking read?


Does no one actually read anymore?

[Rabrrrrrr]

157. "talking about renting though they can buy, and saying that's the responsible thing to do" - no.

No, they aren't saying that - they're saying (because they are nuanced) that SOMETIMES it's the responsible thing to do, or if not responsible, it's certainly not irresponsible.

You're trying to make peoples' specific claims into broadbased general universal claims.

Just because some people say that sometimes renting is a better option for some people, does mean that they are claiming that renting is the only viably responsible option for all people, at all times, everywhere.

I hope you can see the difference.

[JuniperLea]

151. I still have my fingers...

I backed off from nothing. Is English your second language?

It's the fiscally responsible fucking thing to do... people are talking about renting though they can buy, and saying that's the responsible thing to do. Which is bullshit. Can no one follow a fucking conversation anymore? Why would I need to reiterate so many fucking times when a conversation already includes all this and all one need do is actually fucking read?

[Rabrrrrrr]

156. We ask for reiterations because you haven't answered.

In the original post of yours to which I responded, you said:

"If you don't own a home, you are out on a limb when you retire."

That's an absolutist statement that needs a footnote if you're gonna claim it. If you can't footnote it, then don't claim it.

Preferably, you've owned your home for a while and you've paid it off by the time you retire. If not, you are pretty much screwed. Rising rents will eat up all your income.

Another absolutist statement - "rising rents will eat up all your income". It, too, needs a footnote.

Owning a home is the responsible thing to do... for everyone that can own.

I'd like a footnote on that absolutist claim.

Renting should be considered a last option for any fiscally responsible person.

And this is the one I'd especially like a footnote on, since it claims that the only truly important marker of "fiscally responsible" is not to be a renter.

Why I said that you seemed to have backed down from these is because in your previous post you went from absolutists statements such as these to more nuanced ones that are actually true. I respect that, and thank you for it.

But then you tell me in the post to which this is a response that you haven't backed down from anything, and then you offer another absolutist claim "It's the fiscally responsible fucking thing to do". Again, I'd like a footnote.

I can accept "it's *can be a* fiscally responsible" thing. But not "it's THE".

THE insists that it applies to every person, at all times, everywhere. It's a mighty big word, "the". One might wish to use it more thoughtfully. There are many situations in which owning a home would be a very fiscally irresponsible thing to do - for instance, moving some place on a short-term basis when you know you will move (or don't know if you'll be staying).

And quite honestly, I'm not particularly interested if you answered my questions in response to someone else somewhere else in this thread - I can't find it, and I'm looking for answers to my specific questions, and also confused at your mixture of nuanced statements and absolutist statements.

I read amazingly well, and thus my confusion, because you have not offered a clear and consistent statement on your thoughts on this matter, excepting that you do seem to fall more often on the side of the absolutist statement "not owning a home if you are able to own one is fiscally irresponsible". And I disagree strongly with that.

[gkhouston]

162. "We"? You think you're more than one person? Or royal? To the ignore file with your ass. n/t

[Rabrrrrrr]

163. Oooooohhhh, that makes me feel soooooooooooo awful. Does no one read any more?

:rofl:

[WinkyDink]

116. Property taxes rise all the time. It costs $$ to maintain a yard. Etc.

Yes, I in fact OWN my suburban house.

[uncommon]

128. How the hell do you figure? Having a monthly rental payment to make in old age is a hardship for a

lot of lower income people. My mother can barely make her $500/mo. rent for a crappy apartment because she is on Social Security and doesn't have any retirement savings because she was poor all her adult life.

If she had stayed with my stepfather she would be living in a decent home that was mostly paid off and by the time she is elderly wouldn't have a mortgage payment anymore. Then even if she was on Social Security she would have a fighting chance.

[bettyellen]

58. unless you need to go to a nursing home, medicade will take your house, unless you cheat them.

[JuniperLea]

61. Wrong...

A family trust is not cheating, and they don't take the entire home. I just went through this with two grandmothers in the past five years.

[bettyellen]

174. they charge you higher prices till the house money is gone. and the cheaters let

the govt pick up the tab and pass the wealth on. Another way middle to upper class people leave those who are stuglling with a bigger share of the tab.

[Better Believe It]

68. No cheating. Just give it to your kids and/or other relatives.

[SoCalDem]

74. In many states you had better be good at calculating your 'time of need"

Some states have time limits for that "transfer" of assets when they figure your "need"..

[Better Believe It]

97. You do it well before your time of need. Your kids are going to get the property anyway after you

die so why wait around?

[JuniperLea]

82. Yep...

In most states, as long as you sign it over to them directly or to a family trust, and you live an additional five years after doing so, it belongs to your family... 100%.

[bettyellen]

121. well my parents weren't lucky enough to do that, and what about homeoweners without kids?

or are they another group that loses out because they don;t have two kids and a house in the burbs?

[JuniperLea]

153. Luck has absolutely nothing to do with it...

Not one little bit. It's called financial planning and it doesn't cost you anything and the information is available to all. And what about homeowners without kids? What does that have to do with this? Obviously there would be no concern then, would there?

[bettyellen]

175. it costs plenty for lawyers and estate planners - is easier to do if you have money to spare and not

concerned about the ramifications of giving it away. if you suddenly have good size medical bills and are alone n the world, and have always only been able to "make ends meet"
giving away the little bit you have isn;t so easy.

homeowners without kids don;t have the option of giving away their house and then having kids help support them, do they? It's another way single people and poorer people are penalized.

[alarimer]

64. There is a certain freedom in renting.

All the maintenance is done for me. It's in the contract. If the landowner or manager does not do it, you have grounds for getting out of the lease.

Renting allows me the freedom to move almost whenever I want to. In this market at least,I can get out of a lease easily before the end just by paying a "releasing" fee, some fraction of a month's rent. So moving for a job out of town is a piece of cake compared to having to deal with a house. It means I am able to take advantage of opportunities that come my way whenever I want to. I am not tied to this town because I owe more on my house than it is worth.

It is not idyllic but depending on the apartment community, there are benefits. Usually one or more swimming pools (which I do not have to maintain), tennis courts, fitness centers, etc. And if I ham not happy in a given place, all I have to do is wait out the lease and then find something better.

[JuniperLea]

83. How will you work it out when you're retired on a fixed income...

And rents continue to rise out of your reach?

[uncommon]

131. Depending on one's means and savings, renting can be a perfectly good option.

It takes a lot of the work out of living and other investments can be made. I think it is even more important for renters (and I am one and I enjoy being a renter) to think long term and save for retirement though.

[NNN0LHI]

71. I am retired and will own my home in another 40 months and will still be out on a limb

The yearly property taxes alone in another ten years on this house will be more than the combined total of 12 monthly house payments which included principal, interest, taxes and insurance when we first moved here.

I may have to get job as a Walmart greeter after I get this place paid off just to pay the property taxes?

Wouldn't that be a hoot?

Don

[JuniperLea]

85. That really sucks...

So sorry to hear that, Don.

Still, where would you be if you had to keep coming up with ever-increasing rents above and beyond all those?

[shanti]

111. even though

my home won't be paid off when i retire, the mortgage is manageable enough. i was 40 before i bought my one and only home. before i bought it, i never ever expected to own a home, but things just fell into place. there are negatives, but i don't regret the purchase. i do, however, know several people who could afford a home, but aren't interested and would rather rent. :shrug:

[bobbolink]

51. Subsidized housing for middle and upper classes.

While poor people go without.

[lumberjack_jeff]

63. Ideally home ownership promotes a strong middle class.

If I buy property and rent it to you, the interest and depreciation are deductible business expenses.

Do we want the benefit of property ownership going only to the capitalist class?

[avaistheone1]

84. Where I live most landlords rent with a negative cash flow.

So the renter actually lives in a home for less than the cost of actual ownership.

The landlord also pays property taxes, insurance and maintenance on the home - the renter does not.

[JackRiddler]

89. People who go into debt slavery are doing their patriotic duty by expanding bank balance sheets.

[taught_me_patience]

91. Mortgage interest deduction is REGRESSIVE

because renters get nothing... yet they typically have lower incomes, yet so many DUers support it.

DUers seem to be against regressive taxes when it hurts them (sales taxes, gas taxes, etc), yet support regressive policies when it favors them.

[WolverineDG]

105. That's because many DUers own houses & NEED that deduction

:eyes:

as for the poor renters, well, when your heat goes out, you call the landlord & it gets fixed. If it doesn't get fixed, you can get a reduction in your rent.

In my house, if the heat goes out, it stays out until I can afford to call someone in to fix it. I don't get to reduce my mortgage payment either. So forgive me for being :nopity: on this issue.

dg

[Rabrrrrrr]

109. and so you prove taught_me_patience's point

:eyes:

[WolverineDG]

114. You want the mortgage interest deduction?

work your ass off, save your money, & buy a house. Or continue living in a rented apartment where all you have to pay is rent & everything else is handled for you by your landlord.

dg

[muriel_volestrangler]

117. Try and read what you have just written as if someone else had written it

What's the impression you get of that person? That they think people like them are hardworking, and deserve tax breaks, while others are whiners who get things done for them?

Is that really how you wish to come across on DU?

[uncommon]

134. When you rent, you do get things done for you. It's one of the major benefits of renting.

I never have to worry about putting a new roof on this house, or paving the driveway, or paying a plumber, or a flooded basement. I pay someone else to worry about that for me and I couldn't be happier.

[WolverineDG]

144. I worked my ass off to save up for my house

took over 10 years, but I did it. I'm not going to sit back & be silent while someone who didn't do the same whines that the mortgage *interest* deduction is unfair to him because he's a renter.

dg

[muriel_volestrangler]

154. But the interest deduction depends on what you borrow, not what you saved up

If you saved less, and borrowed more, you'd get more tax deduction. Do you still think that the mortgage deduction is such a sign of being virtuous? There's nothing wrong with taking it, of course - if those are the current rules, then it's fine to follow them to your own best advantage.

But I'm amazed you are trying to say that it's something you 'deserve'.

[PVnRT]

160. Perhaps taught_me_patience ought to prove their own point first

[uncommon]

132. Um, people generally support policies that favor them.

Duh.

[hughee99]

94. Any tax break that does not benefit everyone should be gotten rid of!

A tax break for buying an energy efficient car, for upgrading to energy efficient appliances, heating and cooling, retirement, for educational savings, etc... ONLY benefit those who are able to AND choose to take the necessary actions to benefit from them. Those who can't or don't get NOTHING. It's completely unfair that one person can get a tax break for putting in solar panels while the neighbor who does not (or cannot, or already has them) gets NOTHING!

Unless of course the purpose of these tax breaks is to encourage people to do something, in which case, this sort of stuff is unavoidable.

The issue, as far as I can tell, ISN'T that it's unfair for one person to get a tax break while another doesn't, it's an issue about what sort of things should the government use tax breaks to encourage.

[librechik]

167. in my state blind people get a tax break. Is that wrong?

[hughee99]

169. By some of the reasoning I've seen in this thread,

it's unfair to those of us who are sighted. Personally, I have no issue with it.

My point was more about tax-based incentives, though. If the government wants to encourage some activity, a tax-incentive is one way to do it. Just because some people are unwilling or unable to do that activity shouldn't be a sufficient reason to remove the incentive. However, it can certainly happen that the tax code may offer an incentive to do things that the government may not want to be encouraging.

[AnArmyVeteran]

98. The poorest people always pay the most in taxes.

Like you pointed out, renters pay the property taxes for the property where they live but dont get a deduction. The poorest people pay a much higher percentage of their incomes on taxes, interest, and the like than any other group. But right wingers think all poor people are deadbeats. Just the opposite is true. The rich are the biggest deadbeats in the world.

[haele]

99. I remember when we used to have a tax break on all interest paid -

Because that the person taking out the loan was not a final destination of that money; that receivership of the interest was an income or profit to the person making the loan, it would be considered double taxation to tax both the person taking out the loan and the person receiving the interest to tax the money spent to pay the interest.

I'm a renter myself, but I've also been a home owner, and honestly, there's not a lot of benefit difference between the two other than the fact that as a renter, I have less liability to consider if I want to pick up and move tomorrow. But I'm also at the mercy and whims of the property owner and their management company, if they have one - far moreso than a homeowner with just one fixed mortgage is to their bank.

Pitting a renter and an owner against each other is just another way of dividing working Americans against each other through taxes and "perceived" benefits. The only reason St. Ronnie and his "economic" advisors got away with jamming through a double penalty on interest payments on credit cards and personal loans was to leave "large purchase" - like homes, automobiles, or improvement type interest payments deductible on personal income taxes. As it is, the most that most Americans will see is their income tax for that year to be negated by a thousand dollars or so a year as the interest paid for a home or car registration fee gets "taken off" their income - and that's if the yearly interest payment over their standard family deduction.

In my experience, the mortgage deductions that the average income under $150K a year families see is actually beneficial to the local economy as it stimulates the local spending; that extra $1 to $4K that family sees on their tax savings is more likely to be spent than saved; and if it's saved, it's usually saved for the home - maintenance, upgrade costs (termite abatement, green technology, the new roof, plumbing repairs) that will also be seen in the local economy, if not that year, then a few years down.

It sucks that there is no federal renter deductible to match the deduction - and it wasn't really that much - that home ownership gave to the tax payer, but consider states that give a renter deduction don't give very much either. Especially since many rental home owners are using the renter to pay their mortgage; rents in slumlord owned complexes might be low, but they really aren't that much cheaper when you're looking at safer, nicer apartments with better facilities or at a house to rent because your family is larger or has a dog.

Now, if you want to really drive a wedge between working Americans, the real tax wedge is not the deduction difference for renters and owners, but the "difference" between the tax practices between home business owners, independent contractors, or full-time telecommuters and those employees or contractors who work at a site.
After all, why should someone (home owner or renter) who works from home be able to deduct an entire area and the equipment, including furniture, client "entertainment", maid service, home networks and security systems they designate for "work space", as well as, if they're canny, a designated second "work vehicle" with it's maintenance upkeep and insurance? If someone is renting a three-bedroom apartment and using one room solely as an office, they can deduct the "difference" between renting a two and a three bedroom apartment (I had a neighbor in the 90's that used to do that.) Because I don't classify myself as a contractor or work from home/work with clients from home, I can't do that, now, can I?
Even if I dedicate a vehicle to go to and from work, have a laptop and phone/blackberry dedicated to my work, I can't deduct that unless I go through all the hoops of creating an "alcove office" at home and convince my employer that my office is at my home, not at the workspace set up for me at their site, and that my traveling to that site three, four, or six times a week should be deductible to me, not to him or her.
That 8 hours a week I telecommute from home (mostly to justify my employer's energy savings tax break) should count as a tax deduction for me just as it does for someone who works full time from home, right?
Ah well, back to renters -
Ultimately, as it is with the way the economy is, the talking heads will convince everyone renters don't need a tax break - after all, there's lots of foolish people renting more house than they need and sub-letting that big ol' three bedroom "investment" rental house with a two car garage to three other families as well as themselves without the owner knowing - just to pay some jacked up rent the owner imposed on them to make his own mortgage payment. They'll just be abusing the landlord's trust while they take a tidy under-the-table profit for themselves.
Y'know, I can point to at least three or four instances of that within a ten mile radius of where I live right now... so that just proves all renters are bohemians that would sublet (and trash) someone's nice property just to make some tax free income for as long as they can

:sarcasm: in case it was missed.

Haele

[haele]

100. Delete - Dupe

Dupe

[Liberal_in_LA]

107. I live within my means AND have a mortgage... but I get your point

I use to wonder the same when I was renter. The huge tax break was icing on the cake of becoming a homeowner

[Sirveri]

108. That's an interesting issue, but now is not the time. We have enough housing defaults as is.

The only thing smashing the mortgage interest deduction will do right now is to toss my mother and thousands just like her into the streets while giant wealthy corporations gobble up property for pennies on the dollar. If you want to see the biggest loss of middle class wealth in the history of the country, do this, right now.

If you slowly phase it out, at a time when the market can handle it, it COULD work. But RIGHT NOW is not the right time.

[Xithras]

112. Speaking as a former landlord, renters DO get the deduction

Rent is set by factoring mortgage + maintenance costs + a small profit (sometimes). If the mortgage interest deduction goes away, the carrying cost of the home increases. That increase get passed directly on to the renters.

Your argument is the inverse of the common conservative argument that renters shouldn't be allowed to vote on property tax issues because they don't pay them. Actually, they DO...they pay it to the landlord, and the landlord pays it to the government. Just as tax payments are ultimately paid by the renter, tax breaks ultimately impact the renter as well.

I owned several rentals up until last year. Whenever a new bond measure raised the property taxes on any of my properties, the increases were just factored into the following years rent.

[muriel_volestrangler]

115. That would depend on how the landlord has paid for the property

Take a property that is already owned outright by a landlord, rather than being subject to a mortgage. If the landlord rents it out, there will be no tax deduction by anyone. If the landlord sells it to someone outright, there will be no tax deduction by anyone. If the landlord sells it to someone who buys it with a mortgage, they get a tax deduction.

In reality, rent is set by the going rate in the area for similar properties. Landlords take their expenses into account, which for many will include loans they took out to be able to buy the property (could be a mortgage, could be a business loan) and work out what they need to charge, and also what they can get away with - like any other business.

In Britain, we recognise that landlords are running a business, and so mortgage payments are counted as a business expense, and are thus deducted before you work out the tax owed from running the business. Renters and private people with mortgages are treated the same as each other, because the governments (both Conservative and Labour) decided the earlier deductions given for mortgages were costing money, possibly distorting the house market, and any claimed social benefits from forcing up the owner-occupier numbers weren't worth it. When they got rid of the deduction in the 90s, it didn't cause any problems, or, really much concern (it was already limited to a fairly low ceiling).

It also simplifies the tax system to get rid of a deduction, which is another good thing.

[uncommon]

120. Because buying and maintaining a home is an investment in the community -

it generally shows a commitment to sticking around and taking part. While this isn't as true as it used to be, it's still the case for the majority of homeowners and I think it makes sense to reward that.

Also, you can get a tax deduction for rent in many states.

[MadHound]

127. It encourages home ownership, which despite the naysayers, is a good thing

If you want to build a stable, safe neighborhood, you have to do it with at least a mix of homeowners. Having lived in what could generously be described as a "borderline" neighborhood, I saw how homeowners came in, cleaned up the neighborhood, stabilized it and helped make it a community. I've also seen how a neighborhood compromised of only renters can quickly go down hill, complete with dueling crack houses, crime and ruin.

Home ownership is not just the American dream, it is the backbone of American communities. Anything that discourages that backbone is going to lead to the crumbling of our neighborhoods.

[bettyellen]

171. except in cities, where it's way beyond the reach of many many residents.

[MadHound]

173. Depends on the city.

Sure, the coasts and certain other areas of the country have housing prices way beyond what a normal person can afford. But in many cities in the south, midwest and mountains the price for a house is still within reach of working people.

A lot of depends on where you live or want to live.

[bettyellen]

176. the concept of "where you want to live" doesn;t mean very much to the lower classes

it; being penalized for where you were born. for having worse schools, for not wanting to move to more conservative traditional areas with even less opportunities where being a person of color or gay or different might well be a much bigger disadvantage.
no one should have to move down south to pay less. big cities like NY, LA and SF are the economic engines that drive this nation, and taxes in all are disproprtionatley high, we are subsidizing the red states down south and in the midwest, we paid for their roads and infrastructure even though they are less efficient than living in a city. even though they are destroying the countryside. sorry, but if you want to live in a less ecologically efficient manner, if 90% of the benefit is to accumulate wealth then you should be paying your own way. not having city dwellers pick up the tab for you and then tut tuting that home ownership is more "responsible". The only way it's more responsible is that it adds to your own personal bottom line because of policies that wrongly subsidise your lifestyle. So easy to forget it all happens at the expense of others less fortunate.

[Name removed]

178. Deleted message

Message removed by moderator. Click here to review the message board rules.

[bettyellen]

180. go read my post again, I said not one personally hostile thing to you....

which is a fuckload more than I can say about you.
I have been talking about the unfairness of the policies that leave urban dweller paying more, and really all you got in response is is "don;t blame you" Seriously- where did I blame you? NOWHERE. If you admit the policies are unfair and you pretty much did, how nice of you to not give a fuck and attack me for pointing them out.
And all my opinions about the lack of diversity on the fly over states comes from personal experiences, mine and the many many people who came to NYC because they faced intolerance at home. Yes there are pockets of sanity dotted throughout the places you mentioned but they are just that, little pockets- and guess what- no one blamed you! . , it's not about There is much else in your post that is delusional and hyper defensive, you want to read into what I wrote and claim I am nasty, yet threaten to punish urban dwellers because you imagine them to be "snotty" , so your happy to just abandon justice and your principals because of some (also imagined) slight? After reading that, I will cop to just now feeling morally superior, but only because you displayed a very petty and ugly side. And why? because you didn;t like me defending cities at all, and somehow took it personally... yet could think of not one intelligent fact based thing to argue against the unfair policies I spoke about. You hallucinated that this was a personal attack, go look again, and show it to a friend if you need to and ask them to look, I never attacked you, but you sure got plenty nasty with me. Threatening to starve the cities now? Pathetic arrogant and again very very delusional.
Calm down.. It's not all about you. It;s a big country we are talking about, and you are just a tiny and unpleasant little part of it.

[dawg]

133. Some people think the mortgage deduction helps them more than it really does.

Look at these numbers.

Family with $60,000 income and a $150,000 mortgage at 5%. Let's say their itemized deductions are as follows:

Mortage interest - $7500
RE taxes - $1500
State income taxes - $2400
Contributions - let's say $1000

Total itemized deductions = 12,400 yay!

The mortgage interest deduction really helps this family, no?

Well, actually, no it doesn't. Since this family would have qualifed for a standard deduction of 12,400 anyway (11,400 plus an additional 1000 for the property taxes); the family receives zero benefit for this deduction, even though they *think* they are getting an extra $7500 deduction and probably factored that into their purchase decision.

The interest (and therefore the *house*) would need to be much larger in order to get any real benefit. Or, alternately, if their income were much higher the additional state income taxes would push them into getting some benefit. Or large charitable contributions, maybe.

Oh, and if anyone has actually read this far, remember I'm just trying to get people to think. I DO NOT support eliminating this deduction, but I do think something should be done to equalize the situation for those who have smaller homes and smaller mortages, no mortages, or for people who rent.

[uncommon]

135. At least in my area, most people are looking at a $300K mortgage, not $150K.

Some much higher.

[dawg]

137. But you have to admit that's not *average* ...

Six figure incomes need to be involved. And I understand that doesn't necessarily mean a lavish lifestyle - especially in high value areas. But that kind of makes my point - that those without expensive homes get little benefit for their housing expenses, even though the expenses are just as significant to those families as the mortgage interest is to those with six figure incomes.

[uncommon]

138. Most of them don't have 6 figure incomes. It just happens to be what most houses have cost here for

the last 10+ years. Many people with roughly $40-50K household incomes have $250K+ mortgages here. And many of those have home equity lines as well.

And you are correct - a combined household income of $100K isn't peanuts here but it isn't rich either. It's solidly middle class, and even this depends on how many children a family has.

And my expenses are NOT the same as those who own their homes. I don't pay a single cent when something breaks or the roof needs replacing. I pay rent so someone else can deal with the expensive problems.

[dawg]

142. I do understand things are different in higher price areas, but ...

I still question some of the things in your last post. As a homeowner myself, I find it difficult to believe that a family making $40-50K a year could manage a $250,000 mortgage, the taxes and upkeep of the home, utilities, and all the other expenses of life. Just the mortgage payments alone would be around $16K a year.

[uncommon]

145. They barely manage.

But it is very normal for an average just barely middle class family here who owns a home to have this large a mortgage.

I don't know where you live, but in Massachusetts property values were very very high for quite some time and even now are not incredibly low. Even in my area, which is much more economically depressed than most of the state, it's perfectly normal for a home to cost $250K - and not a huge home either. In the suburbs here, $300K is considered normal.

Hell, I make about $50K a year and I feel in no way ready to buy a house, but for most people it is considered a necessary step in life so they try to make it work even if it really doesn't work. A lot of people pay well over 30% of their monthly income toward their mortgage. It shouldn't be that way but it is.

[Romulox]

139. It's a market-distorting subsidy to those who already got theirs.

It has allowed the prices of homes to grow much faster than incomes--a situation that is unsustainable.

[bettyellen]

177. This is 100% true. Home builders got greedy because the tax code let them

[hollowdweller]

146. I think the deduction should be capped

That would put the incentive for buying houses in the moderate range and prevent another housing bubble.

[slackmaster]

147. My overall life expenses are not lower because I pay a mortgage and you pay rent

I'm paying off the value of the home, ongoing upkeep, property tax, AND interest. Plus it's likely that my income is taxed at a higher rate than yours is, because I probably earn more.

Likewise, if we make the same income, except I pay a $100,000 mortgage and you pay a $300,000 mortage, then why should your taxes be lower than mine.

This is fallacious. Someone paying a $300K mortgage is almost certainly in a higher income tax (i.e. tax rate, federal and state) bracket, and paying higher property taxes, than someone with a $100K mortgage.

I would be in favor of additional deductions for rent, or some kind of equalization deduction for people who have made more responsible home choices, rather than taking the deduction away from those who are currently receiveing it.

Are you suggesting that owning your own home is not a responsible choice?

BTW, if I were to rent my house to you, I'd charge you no more than the break-even point so that I don't show a profit and have to pay tax on that. In effect, my mortgage interest deduction would be passed along to you!

[muriel_volestrangler]

155. That's unusual business practice

"BTW, if I were to rent my house to you, I'd charge you no more than the break-even point so that I don't show a profit and have to pay tax on that. "

That's an odd approach to business. Perhaps it would save you some paperwork, but most people think it's worth making a profit, and paying back some in tax, than not making any profit at all. Your attitude is rather like the high earners who, when told the top tax rate will increase, say they want to make sure they earn less than the limit so that they're not in the top band; but they haven't realised that they would then make less money overall.

[slackmaster]

158. In a typical rental market, a landlord who pushes to make much of a profit is not competitive

Many people who rent out single-family homes do so for the purpose of preserving their ownership interest.

[ieoeja]

164. (1) I lease an apartment for LESS than my expenses. (2) The mortgage interest deduction is minor.

(1) Because there is no way in heck I could get my expenses. And I still have one of the most expensive apartments in the area.

On a purely cash basis I am losing money. But I am gaining equity. By the time I retire, the mortgage should be paid off leaving me with a source of positive income.


(2) The mortgage interest deduction is a drop in the bucket compared to the depreciation deduction. In fact, I believe my depreciation alone exceeds the maximum deduction I am allowed to take. So calculating the mortgage interest deduction every year is actually a waste of my time. But for proper record-keeping, I'll keep tossing it in there.


(3) <wait, there was no three in the subject> I used to waste a lot of breath arguing taxes with a Republican apartment owner before I owned my own apartment. The arguments would frequently end with him saying I would learn if I ever bought an apartment and my saying that he should get a new tax lawyer. First year I had the apartment, after taking a shot at the taxes myself, I ended up giving everything over to his tax lawyer to review. After returning it to him twice because of deductions he missed, I ended up with exactly what I gave him in the first place (except for the added expense/deduction of $150 for tax preparation!).

So it turned out I was right. He needed a new tax lawyer.

And it turned out he was right when he said he was paying too much in taxes. He just didn't realize he was paying too much, not because the taxes were too high, but because he was paying more than he should have been!

[muriel_volestrangler]

165. But you said the purpose was to not show a profit

If you meant "I'd be unlikely to be able to make a profit", that would be different than setting the rent level to avoid making a profit.

[slackmaster]

168. OK, whatever.

[FinsUpTechGuy]

149. wow...easy fellas

First off I am a homeowner in NYC. Second, I think that we need to get rid of this tax break. I can afford where I live, and I should pay the bill and that should be it. I should not get a discount on my taxes because I WANTED to own my place. If you can only buy a place because of the tax deduction, you really can't afford what you are buying.

It is still an investment for me, and has plenty of benefits without a tax deduction. One thing that does drive me nuts though, can we please change the stupid mansion tax in NY. Paying a bill called a "mansion" tax for 1100 square feet is kind of strange.