401k and Mortgage deduction are on the table

[an]

Here we go… mortgage deduction + 401k deduction typically benefits the top 20% and we’re in the mood of asking the richer citizens to pay more, so it’s not too surprising.

Fiscal Cliff: Why Congress Might Have to Mess with the 401(k)

[scaredyclassic]

I recall being afraid that the mortgage interest deduction would be yanked as soon as I bought a house. I believe I was told not to worry about that.

Well.

It is always best to expect

[Coronita]

BTW: fwiw…

http://finance.yahoo.com/news/heres-one-way-beat-dividend-193151665.html

And one thing all these tax changes are going to do… Create a lot of opportunities for accountants….

[Coronita]

[quote=squat250]I recall being afraid that the mortgage interest deduction would be yanked as soon as I bought a house. I believe I was told not to worry about that.

Well.

It is always best to expect[/quote]

I doubt that would happen…That would potentially dampen the RE markets and the lobbying groups for RE wouldn’t let that happen.

Locally, be prepared for prop 13 to disappear…But that will translate into higher rent…

[scaredyclassic]

I kinda doubt it too. But it should be taken off the table and placed on the couch where it can get lOst under a cushion.

[Coronita]

[quote=squat250]I kinda doubt it too. But it should be taken off the table and placed on the couch where it can get lOst under a cushion.[/quote]

Well I think a lot of this is MSM speculating on what one or two crazy politicians might think….Who knows, they might start taxing money that isn’t spent from a savings account for all we can think of..

[SK in CV]

So far, they’re only “on the table” in the same respect that legalizing pot under federal law is on the table. Nobody that’s actually involved in the negotiations has publicly mentioned eliminating, capping or even limiting the mortgage or 401K deductions. Remember, eliminating or capping deductions was the preferred Romney method of increasing revenue. It kind of, sort of, sounded like a good idea until he was asked to name specific deductions. He wouldn’t. He couldn’t. And the reason is that these deductions don’t mainly hit the top 1%. They hit mainly those between the top 1% and the top 3%. The 2%ers. Those earning between $250k and $400K. Anything to save the really rich from paying more. If they can’t get the poor to pay more, maybe they can get the almost rich to pay more.

I think your deductions are safe.

[Coronita]

Lol… You didn’t think this wasn’t going to be considered.. Yeah, Roth accounts are going to be very very interesting in the coming years…

Actually, IF the government really wants to incentivize spending, what they should do is allow people to take a tax free distribution out of their 401k before they reach retirement PROVIDED that it is spent on something like a car, house, boat,etc…

If they gave an incentive to do this, I would take a distribution out immediately and use it to buy property.

Such spending would help the economy…Buying property or such would contribute to the realtor’s bottom line, an appraiser’s bottom line, escrow company, title company, which in turn would create more income for more americans which would then end up spending $4 for every $1 they nearly earn.

Well that, or maybe a Porsche.

[Coronita]

[quote=SK in CV]So far, they’re only “on the table” in the same respect that legalizing pot under federal law is on the table. Nobody that’s actually involved in the negotiations has publicly mentioned eliminating, capping or even limiting the mortgage or 401K deductions. Remember, eliminating or capping deductions was the preferred Romney method of increasing revenue. It kind of, sort of, sounded like a good idea until he was asked to name specific deductions. He wouldn’t. He couldn’t. And the reason is that these deductions don’t mainly hit the top 1%. They hit mainly those between the top 1% and the top 3%. The 2%ers. Those earning between $250k and $400K. Anything to save the really rich from paying more. If they can’t get the poor to pay more, maybe they can get the almost rich to pay more.

I think your deductions are safe.[/quote]

If that’s the case, I would say these policy would be consistent with what our government has been trying to do all along. Tax above average W2/1009 salaried slave workers, while leaving the top 1% with their loopholes intact, meanwhile given the of america the impression “job done…see rich are now paying more”…..Well it doesn’t matter, because given if it was the other party in control, they would do the same thing….

Personally, I’d be more fearful of what CA government can do, versus what the Fed will do at this point.

[enron_by_the_sea]

[quote=SK in CV] It kind of, sort of, sounded like a good idea until he was asked to name specific deductions. He wouldn’t. He couldn’t. And the reason is that these deductions don’t mainly hit the top 1%. They hit mainly those between the top 1% and the top 3%. The 2%ers. Those earning between $250k and $400K. Anything to save the really rich from paying more. If they can’t get the poor to pay more, maybe they can get the almost rich to pay more.
[/quote]

Exactly. Paul Krugman wrote – and I agree with the sentiment – that GOP is prepared to throw moderately wealthy under the bus to protect the super rich !!!

This fight really shows whose side GOP is truly on. Until this moment it was easy for them to hide it.

To their credit, Dems proposal at least make super rich pay more than moderately wealthy ( who in turn pay more than middle class who pay more than poor … )

[enron_by_the_sea]

[quote=squat250]I recall being afraid that the mortgage interest deduction would be yanked as soon as I bought a house. I believe I was told not to worry about that.

Well.

It is always best to expect[/quote]

There is another mortgage interest deduction. It is in schedule-E. All you have to do is rent out the house you own to someone else and start renting identical house nearby. You can not only deduct mortgage interest but also HOA, insurance and everything else. No one is proposing to take that away 🙂

The above is precisely why removal of mortgage interest deduction will not result into meaningful increase in tax revenue in the very long term. People’s preferences will just shift to renting because that will become the most tax efficient arrangement in the society.

[Coronita]

[quote=enron_by_the_sea][quote=SK in CV] It kind of, sort of, sounded like a good idea until he was asked to name specific deductions. He wouldn’t. He couldn’t. And the reason is that these deductions don’t mainly hit the top 1%. They hit mainly those between the top 1% and the top 3%. The 2%ers. Those earning between $250k and $400K. Anything to save the really rich from paying more. If they can’t get the poor to pay more, maybe they can get the almost rich to pay more.
[/quote]

Exactly. Paul Krugman wrote – and I agree with the sentiment – that GOP is prepared to throw moderately wealthy under the bus to protect the super rich !!!

This fight really shows whose side GOP is truly on. Until this moment it was easy for them to hide it.[/quote]

Enron, it doesn’t matter .Both parties always throw the moderate wealthy under the bus..They just call it differently.

GOP calls moderate wealthy “middle class”.
Democrats calls moderate wealthy “rich class”.

Whenever government needs to tax more, they just love to hit this group…

And while “wealthy means $200k for someone single”, it also means $250k for a couple….I don’t know why, but I guess maybe some people think women shouldn’t have a meaningful career after they are married but just be a stay at home mom..(and no I don’t think that way)…But regardless, it also means a LOT of you slightly above middle class families are gonna get shafted… Like I’ve been saying all along..Really rich people…Not gonna get hit by this at all..

[Coronita]

[quote=enron_by_the_sea][quote=squat250]I recall being afraid that the mortgage interest deduction would be yanked as soon as I bought a house. I believe I was told not to worry about that.

Well.

It is always best to expect[/quote]

There is another mortgage interest deduction. It is in schedule-E. All you have to do is rent out the house you own to someone else and start renting identical house nearby. You can not only deduct mortgage interest but also HOA, insurance and everything else. No one is proposing to take that away 🙂

The above is precisely why removal of mortgage interest deduction will not result into meaningful increase in tax revenue in the very long term. People’s preferences will just shift to renting because that will become the most tax efficient arrangement in the society.[/quote]

I don’t know but it’s getting pretty hard for me to talk to an accountant that I almost never talk to…He’s pretty busy these days.

It doesn’t quite work that way enron…When you rent out a house to someone else, you can deduct the mortgage as an expense but you also have to report the rental income.

However, if you rent someone else’s house, you can’t deduct your rental cost (unless your poor..And in that case, you probably can’t qualify to buy a home)…

So I’m not sure how this would be beneficial for you…Seems like a lot of paperwork to report a $0 gain.

[SD Realtor]

It wouldn’t surprise me if some of the expenses on your schedule E are proposed for the chopping block. You know how rich all those evil landlords are.

[enron_by_the_sea]

[quote=flu]
It doesn’t quite work that way enron…When you rent out a house to someone else, you can deduct the mortgage as an expense but you also have to report the rental income.

However, if you rent someone else’s house, you can’t deduct your rental cost (unless your poor..And in that case, you probably can’t qualify to buy a home)…

So I’m not sure how this would be beneficial for you…Seems like a lot of paperwork to report a $0 gain.[/quote]

Oops. That is probably why this does not work. Nevermind.

[Author]

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