Mortgage Deduction Looks Less Sacred

[jpinpb]

Well, a Dem passed the no capital gains tax when selling a house earning 250k individual 500k married. Why pass a law like that if you don’t pay taxes anyway.

When I had my house, I used the write-off. That isn’t a reason for me to buy one, especially when I’m living in an area I want to buy in and my rent is almost 1/2 what it would cost me to buy in my very complex – and still barely close w/a write-off.

But as I said, many people tout the benefits of write-off when buying, so this is going to shut some people up about it and others will reconsider that factor.

[garysears]

I’ve never understood the “benefit” of the interest write-off. In my particular case it doesn’t seem to pencil out. I still think I’m slightly better off NOT itemizing.

But I’ve been hearing the argument over the past several years regarding CA real estate. And I’ve wondered how it could possibly be smart to buy an overpriced house and end up underwater in the long run all for the sake of saving a few thousand in taxes in the short run.

In general I would be in favor of the government NOT subsidizing home ownership at all, especially not mortgages or mortgage rates. It seems to me like efforts to make homes “more affordable” only allow prices to get bid up more, which is actually not more affordable. Seems like “affordable” and “easy credit” are often confused.

Does that mean if I buy this year I’m not going to claim the $8K credit? No. But the existence of that credit make me suspicious that I can save more than that if I wait another year. The $8K credit seems designed to try to instigate a suckers rally. Besides, if I wait to 2010 will I get a $15K credit? How about $50K?

[garysears]

I’ve never understood the “benefit” of the interest write-off. In my particular case it doesn’t seem to pencil out. I still think I’m slightly better off NOT itemizing.

But I’ve been hearing the argument over the past several years regarding CA real estate. And I’ve wondered how it could possibly be smart to buy an overpriced house and end up underwater in the long run all for the sake of saving a few thousand in taxes in the short run.

In general I would be in favor of the government NOT subsidizing home ownership at all, especially not mortgages or mortgage rates. It seems to me like efforts to make homes “more affordable” only allow prices to get bid up more, which is actually not more affordable. Seems like “affordable” and “easy credit” are often confused.

Does that mean if I buy this year I’m not going to claim the $8K credit? No. But the existence of that credit make me suspicious that I can save more than that if I wait another year. The $8K credit seems designed to try to instigate a suckers rally. Besides, if I wait to 2010 will I get a $15K credit? How about $50K?

[garysears]

I’ve never understood the “benefit” of the interest write-off. In my particular case it doesn’t seem to pencil out. I still think I’m slightly better off NOT itemizing.

But I’ve been hearing the argument over the past several years regarding CA real estate. And I’ve wondered how it could possibly be smart to buy an overpriced house and end up underwater in the long run all for the sake of saving a few thousand in taxes in the short run.

In general I would be in favor of the government NOT subsidizing home ownership at all, especially not mortgages or mortgage rates. It seems to me like efforts to make homes “more affordable” only allow prices to get bid up more, which is actually not more affordable. Seems like “affordable” and “easy credit” are often confused.

Does that mean if I buy this year I’m not going to claim the $8K credit? No. But the existence of that credit make me suspicious that I can save more than that if I wait another year. The $8K credit seems designed to try to instigate a suckers rally. Besides, if I wait to 2010 will I get a $15K credit? How about $50K?

[garysears]

I’ve never understood the “benefit” of the interest write-off. In my particular case it doesn’t seem to pencil out. I still think I’m slightly better off NOT itemizing.

But I’ve been hearing the argument over the past several years regarding CA real estate. And I’ve wondered how it could possibly be smart to buy an overpriced house and end up underwater in the long run all for the sake of saving a few thousand in taxes in the short run.

In general I would be in favor of the government NOT subsidizing home ownership at all, especially not mortgages or mortgage rates. It seems to me like efforts to make homes “more affordable” only allow prices to get bid up more, which is actually not more affordable. Seems like “affordable” and “easy credit” are often confused.

Does that mean if I buy this year I’m not going to claim the $8K credit? No. But the existence of that credit make me suspicious that I can save more than that if I wait another year. The $8K credit seems designed to try to instigate a suckers rally. Besides, if I wait to 2010 will I get a $15K credit? How about $50K?

[garysears]

I’ve never understood the “benefit” of the interest write-off. In my particular case it doesn’t seem to pencil out. I still think I’m slightly better off NOT itemizing.

But I’ve been hearing the argument over the past several years regarding CA real estate. And I’ve wondered how it could possibly be smart to buy an overpriced house and end up underwater in the long run all for the sake of saving a few thousand in taxes in the short run.

In general I would be in favor of the government NOT subsidizing home ownership at all, especially not mortgages or mortgage rates. It seems to me like efforts to make homes “more affordable” only allow prices to get bid up more, which is actually not more affordable. Seems like “affordable” and “easy credit” are often confused.

Does that mean if I buy this year I’m not going to claim the $8K credit? No. But the existence of that credit make me suspicious that I can save more than that if I wait another year. The $8K credit seems designed to try to instigate a suckers rally. Besides, if I wait to 2010 will I get a $15K credit? How about $50K?

[peterb]

Hey, what about prop 13?!! CA property tax is way too low. Times are a changing. Anyone that thinks govt gives a damn about them is not thinking straight. They raise taxes in recessions because they want the money and they know some people still have some. It’s not logical, but niether are they. Look for more of it as the govt is now on the look out for more ways to collect.

Check the history books. Before the govt got involved in subsidizing home ownership, only about 25% of the population owned their own homes. Between tax deductions, cheap money and FNM and freddie, vet loans, etc… it made a huge difference.

[peterb]

Hey, what about prop 13?!! CA property tax is way too low. Times are a changing. Anyone that thinks govt gives a damn about them is not thinking straight. They raise taxes in recessions because they want the money and they know some people still have some. It’s not logical, but niether are they. Look for more of it as the govt is now on the look out for more ways to collect.

Check the history books. Before the govt got involved in subsidizing home ownership, only about 25% of the population owned their own homes. Between tax deductions, cheap money and FNM and freddie, vet loans, etc… it made a huge difference.

[peterb]

Hey, what about prop 13?!! CA property tax is way too low. Times are a changing. Anyone that thinks govt gives a damn about them is not thinking straight. They raise taxes in recessions because they want the money and they know some people still have some. It’s not logical, but niether are they. Look for more of it as the govt is now on the look out for more ways to collect.

Check the history books. Before the govt got involved in subsidizing home ownership, only about 25% of the population owned their own homes. Between tax deductions, cheap money and FNM and freddie, vet loans, etc… it made a huge difference.

[peterb]

Hey, what about prop 13?!! CA property tax is way too low. Times are a changing. Anyone that thinks govt gives a damn about them is not thinking straight. They raise taxes in recessions because they want the money and they know some people still have some. It’s not logical, but niether are they. Look for more of it as the govt is now on the look out for more ways to collect.

Check the history books. Before the govt got involved in subsidizing home ownership, only about 25% of the population owned their own homes. Between tax deductions, cheap money and FNM and freddie, vet loans, etc… it made a huge difference.

[peterb]

Hey, what about prop 13?!! CA property tax is way too low. Times are a changing. Anyone that thinks govt gives a damn about them is not thinking straight. They raise taxes in recessions because they want the money and they know some people still have some. It’s not logical, but niether are they. Look for more of it as the govt is now on the look out for more ways to collect.

Check the history books. Before the govt got involved in subsidizing home ownership, only about 25% of the population owned their own homes. Between tax deductions, cheap money and FNM and freddie, vet loans, etc… it made a huge difference.

[davelj]

If we start with a $250K house and a $200K mortgage at 5.5% over 30 years, assuming a 25% tax bracket, the present value of the mortgage interest tax deduction is about $35K (discounting at 5.5%) over the life of the loan. (I made some crude assumptions to simplify the calculation that could swing the numbers by a couple thousand dollars in either direction.) That amounts to about 14% of the value of the house. That’s a meaningful number, but I agree the whole concept/rationale is over-marketed.

[davelj]

If we start with a $250K house and a $200K mortgage at 5.5% over 30 years, assuming a 25% tax bracket, the present value of the mortgage interest tax deduction is about $35K (discounting at 5.5%) over the life of the loan. (I made some crude assumptions to simplify the calculation that could swing the numbers by a couple thousand dollars in either direction.) That amounts to about 14% of the value of the house. That’s a meaningful number, but I agree the whole concept/rationale is over-marketed.

[davelj]

If we start with a $250K house and a $200K mortgage at 5.5% over 30 years, assuming a 25% tax bracket, the present value of the mortgage interest tax deduction is about $35K (discounting at 5.5%) over the life of the loan. (I made some crude assumptions to simplify the calculation that could swing the numbers by a couple thousand dollars in either direction.) That amounts to about 14% of the value of the house. That’s a meaningful number, but I agree the whole concept/rationale is over-marketed.

[davelj]

If we start with a $250K house and a $200K mortgage at 5.5% over 30 years, assuming a 25% tax bracket, the present value of the mortgage interest tax deduction is about $35K (discounting at 5.5%) over the life of the loan. (I made some crude assumptions to simplify the calculation that could swing the numbers by a couple thousand dollars in either direction.) That amounts to about 14% of the value of the house. That’s a meaningful number, but I agree the whole concept/rationale is over-marketed.

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