2016 Postmortem

Jeff In Milwaukee

(13,992 posts)

36. The answer to every tax question: It Depends

Sat Dec 1, 2012, 01:46 PM

Dec 2012

It depends on how they plan to limit the deduction. I've heard overall limitations on itemized deductions, which would be a different matter altogether.

Remember that there's your Mortgage Interest + Your Property taxes. But being able to itemize your deductions allows you to write off state and local income taxes, medical expenses, casualty losses, expenses related to your employment, in addition to your charitable contributions.

I've heard some argue that we should limit itemized deductions to $17,000. That would be a significant problem.

It's not uncommon for an otherwise middle class taxpayer to have up to $30,000 in itemized deductions. Think of a $2000 mortgage payment in the first few years of the mortgage -- it's all interest and property taxes (and deductible). That's $24,000 right there. Throw in state income taxes and contributions, and you can get to $30,000 pretty quick.

A $17K limit could increase a person's taxes by $2-3,000 per year.

Edit history

Please sign in to view edit histories.

53 replies

= new reply since forum marked as read

Highlight:

How much does the Mortgage interest deduction really save us? [View all] xxxsdesdexxx Nov 2012 OP

get rid of it for everybody just because YOU don't save much. ok nt msongs Nov 2012 #1

Should we get rid of it? I'm not saying yes or no xxxsdesdexxx Nov 2012 #6

first you have to have a mortgage. then you can calculate. hollysmom Nov 2012 #2

Depends on if you think promoting affordability increases housing demand, and thereby prices NoOneMan Nov 2012 #3

It also depends on where you live in the country NewJeffCT Nov 2012 #4

There is no obnoxiousdrunk Nov 2012 #5

I believe you are correct, so I will edit my original post to remove that. xxxsdesdexxx Nov 2012 #7

For people who are unable to refinance at a low rate because they have lost their jobs, djean111 Nov 2012 #8

Considering I deduction 4 to 5 times the amount of the standard single tax deduction of $5800, sinkingfeeling Nov 2012 #9

Using your numbers Proud Public Servant Nov 2012 #10

part of what pisses me off about this discussion is that i never would have bought my house unblock Nov 2012 #11

In a way, you are almost suggesting that the deduction increases demand NoOneMan Nov 2012 #12

is there an offsetting effect? sure. is it a 100% offset? of course not. unblock Nov 2012 #15

The damage is already done NoOneMan Nov 2012 #16

You make a good point, unblock. JDPriestly Dec 2012 #52

I'm in the same boat as you ... Myrina Dec 2012 #44

in my case, I no longer have a mortgage so it doesn't save me anything now. But it used to. Filibuster Harry Nov 2012 #13

We should get rid of it and replace it with a 15% credit. bornskeptic Nov 2012 #14

Excellent idea xxxsdesdexxx Nov 2012 #17

sounds good for leveling the playing field but c'mon; if my tax rate is Filibuster Harry Dec 2012 #38

No State Income Tax Where You Live? AndyTiedye Nov 2012 #19

We paid about $2200 in state income tax last year. bornskeptic Dec 2012 #28

you are forgetting those of us who live in high income tax states lasttrip Nov 2012 #18

I pay about $2,265.00 in state income tax to the state of California xxxsdesdexxx Nov 2012 #20

I think your example is self serving and restrictive and does not ask the right question. I for one OhioworkingDem Nov 2012 #21

Not middle zipplewrath Dec 2012 #40

LOL that caught my eye too! Myrina Dec 2012 #45

Once you overcome your standard deduction, mary195149 Nov 2012 #22

Medical expenses you can deduct only the expenses that exceed 10% of your AGI question everything Nov 2012 #24

83.7 Billions question everything Nov 2012 #23

Saves me alot Gargoyle22 Dec 2012 #25

It saves me a lot too Meshuga Dec 2012 #29

I Don't Have Kids; What Other Tax Break Iggy Dec 2012 #26

Would we be willing to eliminate the deduction for future mortgages? exboyfil Dec 2012 #27

It saves many of us a lot. Progressive dog Dec 2012 #30

Recalculate that with 7percent interest and pretend that you... peace13 Dec 2012 #31

I Didn't Even Look At The Numbers. Most Everybody Likes It. Taking It Away Is A Political LOSER DemocratSinceBirth Dec 2012 #32

Agreed Jeff In Milwaukee Dec 2012 #37

Don't think it is worth as much as folks think. But it's not going away. Everyone wants a loophole. Hoyt Dec 2012 #33

With mortgage interest at all time lows, it doesn't amount to a lot; however.... Texin Dec 2012 #34

good post taught_me_patience Dec 2012 #35

The answer to every tax question: It Depends Jeff In Milwaukee Dec 2012 #36

Since my home was foreclosed on, it doesn't save me ANYTHING. Bake Dec 2012 #39

Where's my renters deduction DAVEDCHICAGO Dec 2012 #41

If you rent you do not have to pay property taxes or carry insurance on the dwelling itself. djean111 Dec 2012 #43

I'M also paying a Premium to them to cover those items.. DAVEDCHICAGO Dec 2012 #48

No, sorry - you have no real skin in the game. djean111 Dec 2012 #49

read this DAVEDCHICAGO Dec 2012 #50

If your landlord doesn't get the deduction, your rent goes up. JDPriestly Dec 2012 #53

The interest deduction helps offset the lack of equity paid off in the opening years.. smorkingapple Dec 2012 #42

+100 Myrina Dec 2012 #46

I'm married too. qwlauren35 Dec 2012 #47

At today's interest rates, the deduction may not make that much difference for families JDPriestly Dec 2012 #51