Proposed Mortgage Interest Deduction Phase Out?

[jpinpb]

Do you think this will have a reverse effect of the capital gains tax break that Clinton enacted?

I remember many people investing in real estate after that was passed.

People still advocate to buy real estate for the tax write-off.

So now if the mortgage interest deduction is reduced, that certainly will be one more factor diminishing the incentive to buy.

[Zeitgeist]

Mortgage deductions may change

Tops on the CBO’s hit list for housing: Slash deductions for homeowner mortgage interest from the present $1.1 million limit to $500,000, phased in with $100,000 annual reductions starting in 2013 and extending to 2019. Under current law, taxpayers can write off mortgage interest on their principal home debt up to $1 million, and on home equity debt up to $100,000.

Under the CBO’s option, that maximum mortgage debt amount would shrink yearly until it hit $500,000. Over a 10-year period, this change alone would boost federal tax collections by an estimated $41 billion.

http://www.bostonherald.com/business/real_estate/view.bg?articleid=1194151&srvc=home&position=emailed

[Zeitgeist]

Mortgage deductions may change

Tops on the CBO’s hit list for housing: Slash deductions for homeowner mortgage interest from the present $1.1 million limit to $500,000, phased in with $100,000 annual reductions starting in 2013 and extending to 2019. Under current law, taxpayers can write off mortgage interest on their principal home debt up to $1 million, and on home equity debt up to $100,000.

Under the CBO’s option, that maximum mortgage debt amount would shrink yearly until it hit $500,000. Over a 10-year period, this change alone would boost federal tax collections by an estimated $41 billion.

http://www.bostonherald.com/business/real_estate/view.bg?articleid=1194151&srvc=home&position=emailed

[Zeitgeist]

Mortgage deductions may change

Tops on the CBO’s hit list for housing: Slash deductions for homeowner mortgage interest from the present $1.1 million limit to $500,000, phased in with $100,000 annual reductions starting in 2013 and extending to 2019. Under current law, taxpayers can write off mortgage interest on their principal home debt up to $1 million, and on home equity debt up to $100,000.

Under the CBO’s option, that maximum mortgage debt amount would shrink yearly until it hit $500,000. Over a 10-year period, this change alone would boost federal tax collections by an estimated $41 billion.

http://www.bostonherald.com/business/real_estate/view.bg?articleid=1194151&srvc=home&position=emailed

[Zeitgeist]

Mortgage deductions may change

Tops on the CBO’s hit list for housing: Slash deductions for homeowner mortgage interest from the present $1.1 million limit to $500,000, phased in with $100,000 annual reductions starting in 2013 and extending to 2019. Under current law, taxpayers can write off mortgage interest on their principal home debt up to $1 million, and on home equity debt up to $100,000.

Under the CBO’s option, that maximum mortgage debt amount would shrink yearly until it hit $500,000. Over a 10-year period, this change alone would boost federal tax collections by an estimated $41 billion.

http://www.bostonherald.com/business/real_estate/view.bg?articleid=1194151&srvc=home&position=emailed

[Zeitgeist]

Mortgage deductions may change

Tops on the CBO’s hit list for housing: Slash deductions for homeowner mortgage interest from the present $1.1 million limit to $500,000, phased in with $100,000 annual reductions starting in 2013 and extending to 2019. Under current law, taxpayers can write off mortgage interest on their principal home debt up to $1 million, and on home equity debt up to $100,000.

Under the CBO’s option, that maximum mortgage debt amount would shrink yearly until it hit $500,000. Over a 10-year period, this change alone would boost federal tax collections by an estimated $41 billion.

http://www.bostonherald.com/business/real_estate/view.bg?articleid=1194151&srvc=home&position=emailed

[joec]

Reading this article, you get a sense that some folks feel they should just tax people 100% and see what happens. Wow, it will raise 200 trillion by 2020!

Not to mention, change Roth IRAs and tax those at 95% too since the guvment needs money.

Seriously, I doubt these ideas will pass since anyone who votes for it will be out of office next term or recalled sooner.

[joec]

Reading this article, you get a sense that some folks feel they should just tax people 100% and see what happens. Wow, it will raise 200 trillion by 2020!

Not to mention, change Roth IRAs and tax those at 95% too since the guvment needs money.

Seriously, I doubt these ideas will pass since anyone who votes for it will be out of office next term or recalled sooner.

[joec]

Reading this article, you get a sense that some folks feel they should just tax people 100% and see what happens. Wow, it will raise 200 trillion by 2020!

Not to mention, change Roth IRAs and tax those at 95% too since the guvment needs money.

Seriously, I doubt these ideas will pass since anyone who votes for it will be out of office next term or recalled sooner.

[joec]

Reading this article, you get a sense that some folks feel they should just tax people 100% and see what happens. Wow, it will raise 200 trillion by 2020!

Not to mention, change Roth IRAs and tax those at 95% too since the guvment needs money.

Seriously, I doubt these ideas will pass since anyone who votes for it will be out of office next term or recalled sooner.

[joec]

Reading this article, you get a sense that some folks feel they should just tax people 100% and see what happens. Wow, it will raise 200 trillion by 2020!

Not to mention, change Roth IRAs and tax those at 95% too since the guvment needs money.

Seriously, I doubt these ideas will pass since anyone who votes for it will be out of office next term or recalled sooner.

[UCGal]

Interesting.

But… to take a different view…

* This might encourage prices to go down.

* This might encourage people to wait to purchase till they have bigger down payments.

I did some calcs – if you buy a house with a loan for $600k, at 6% for 30 years, you’ll pay $695k in interest. This might make people stop and think about taking out that large of a loan if only $500k of that $695k was deductable. I doubt many people look at how much interest is paid on 30 year home loans, though…

I also wonder how serial refinancing plays into this. If folks who keep refinancing, extending the length of the loan (and therefore the amount of interest paid in the end) will hit this point, even with smaller principals.

Whatever happened to saving up a sizeable down payment and paying off the loan as quickly as possible.

It’s not that long ago that ALL interest was deductable. Car loan interest, credit card interest, etc. 1986, Reagan signed the bill that eliminated those deductions. People cried that the world would end when they eliminated these tax deductions. It didn’t.

(I feel like an old man yelling “Get off my lawn” at the kids… but I really don’t get how people can be comfortable with such large debt. I’m old school – carry zero balance on credit cards, cars are paid for, and mortgage is on an aggressive payoff schedule – so I’ll be debt free.)

[UCGal]

Interesting.

But… to take a different view…

* This might encourage prices to go down.

* This might encourage people to wait to purchase till they have bigger down payments.

I did some calcs – if you buy a house with a loan for $600k, at 6% for 30 years, you’ll pay $695k in interest. This might make people stop and think about taking out that large of a loan if only $500k of that $695k was deductable. I doubt many people look at how much interest is paid on 30 year home loans, though…

I also wonder how serial refinancing plays into this. If folks who keep refinancing, extending the length of the loan (and therefore the amount of interest paid in the end) will hit this point, even with smaller principals.

Whatever happened to saving up a sizeable down payment and paying off the loan as quickly as possible.

It’s not that long ago that ALL interest was deductable. Car loan interest, credit card interest, etc. 1986, Reagan signed the bill that eliminated those deductions. People cried that the world would end when they eliminated these tax deductions. It didn’t.

(I feel like an old man yelling “Get off my lawn” at the kids… but I really don’t get how people can be comfortable with such large debt. I’m old school – carry zero balance on credit cards, cars are paid for, and mortgage is on an aggressive payoff schedule – so I’ll be debt free.)

[UCGal]

Interesting.

But… to take a different view…

* This might encourage prices to go down.

* This might encourage people to wait to purchase till they have bigger down payments.

I did some calcs – if you buy a house with a loan for $600k, at 6% for 30 years, you’ll pay $695k in interest. This might make people stop and think about taking out that large of a loan if only $500k of that $695k was deductable. I doubt many people look at how much interest is paid on 30 year home loans, though…

I also wonder how serial refinancing plays into this. If folks who keep refinancing, extending the length of the loan (and therefore the amount of interest paid in the end) will hit this point, even with smaller principals.

Whatever happened to saving up a sizeable down payment and paying off the loan as quickly as possible.

It’s not that long ago that ALL interest was deductable. Car loan interest, credit card interest, etc. 1986, Reagan signed the bill that eliminated those deductions. People cried that the world would end when they eliminated these tax deductions. It didn’t.

(I feel like an old man yelling “Get off my lawn” at the kids… but I really don’t get how people can be comfortable with such large debt. I’m old school – carry zero balance on credit cards, cars are paid for, and mortgage is on an aggressive payoff schedule – so I’ll be debt free.)

[UCGal]

Interesting.

But… to take a different view…

* This might encourage prices to go down.

* This might encourage people to wait to purchase till they have bigger down payments.

I did some calcs – if you buy a house with a loan for $600k, at 6% for 30 years, you’ll pay $695k in interest. This might make people stop and think about taking out that large of a loan if only $500k of that $695k was deductable. I doubt many people look at how much interest is paid on 30 year home loans, though…

I also wonder how serial refinancing plays into this. If folks who keep refinancing, extending the length of the loan (and therefore the amount of interest paid in the end) will hit this point, even with smaller principals.

Whatever happened to saving up a sizeable down payment and paying off the loan as quickly as possible.

It’s not that long ago that ALL interest was deductable. Car loan interest, credit card interest, etc. 1986, Reagan signed the bill that eliminated those deductions. People cried that the world would end when they eliminated these tax deductions. It didn’t.

(I feel like an old man yelling “Get off my lawn” at the kids… but I really don’t get how people can be comfortable with such large debt. I’m old school – carry zero balance on credit cards, cars are paid for, and mortgage is on an aggressive payoff schedule – so I’ll be debt free.)

[Author]

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