Proposed Mortgage Interest Deduction Phase Out?

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[quote=AN][quote=CONCHO]Oh yeah, home prices would collapse. Also, people will moonwalk away from the mortgages en masse. I know I probably would![/quote]
Except for those who are paying less for mortgage than comparable rent, even w/out mortgage deduction.[/quote]

I think if they really phased the deduction out, home prices would drop drastically. Assuming cash-rich buyers pick these houses up at record low prices, what are they going to do with them? Rent them out! Bingo, lots more rental properties on the market will push rental prices down along with home prices.

I think it will be deflationary all around in housing, both in rent cost as well as home prices. People would moonwalk in huge numbers right into similar rentals discounted 30% also. Or, even better, they can just stop paying their mortgage, save the cash, wait 18 months for the foreclosure process to complete and then plop down cash for one of the new cheap houses!

In an immoral society, those with the most morals are destroyed first.

[an]

[quote=CONCHO]I think if they really phased the deduction out, home prices would drop drastically. Assuming cash-rich buyers pick these houses up at record low prices, what are they going to do with them? Rent them out! Bingo, lots more rental properties on the market will push rental prices down along with home prices.

I think it will be deflationary all around in housing, both in rent cost as well as home prices. People would moonwalk in huge numbers right into similar rentals discounted 30% also. Or, even better, they can just stop paying their mortgage, save the cash, wait 18 months for the foreclosure process to complete and then plop down cash for one of the new cheap houses!

In an immoral society, those with the most morals are destroyed first.[/quote]
Again, I don’t think everyone would walk. Only those who depend on the deduction to make their mortgage comparable to rent. All the people who are paying less for mortgage than rent of similar house wouldn’t walk. I know I wouldn’t. All the people I know who are near or at retirement and own anywhere between $20k-100k left on their SFR wouldn’t walk either. Since their mortgage are currently well < $1k/month. They can't even rent a 1/1 apartment for that monthly payment. I can see a squish down but I don't see price dropping drastically bellow rent. If it does, you'll see many more investors jumping in to push up prices. I also don't think rent will take a whack either. Rent didn't drop 30-50% from 2005 like housing price.

[an]

[quote=CONCHO]I think if they really phased the deduction out, home prices would drop drastically. Assuming cash-rich buyers pick these houses up at record low prices, what are they going to do with them? Rent them out! Bingo, lots more rental properties on the market will push rental prices down along with home prices.

I think it will be deflationary all around in housing, both in rent cost as well as home prices. People would moonwalk in huge numbers right into similar rentals discounted 30% also. Or, even better, they can just stop paying their mortgage, save the cash, wait 18 months for the foreclosure process to complete and then plop down cash for one of the new cheap houses!

In an immoral society, those with the most morals are destroyed first.[/quote]
Again, I don’t think everyone would walk. Only those who depend on the deduction to make their mortgage comparable to rent. All the people who are paying less for mortgage than rent of similar house wouldn’t walk. I know I wouldn’t. All the people I know who are near or at retirement and own anywhere between $20k-100k left on their SFR wouldn’t walk either. Since their mortgage are currently well < $1k/month. They can't even rent a 1/1 apartment for that monthly payment. I can see a squish down but I don't see price dropping drastically bellow rent. If it does, you'll see many more investors jumping in to push up prices. I also don't think rent will take a whack either. Rent didn't drop 30-50% from 2005 like housing price.

[an]

[quote=CONCHO]I think if they really phased the deduction out, home prices would drop drastically. Assuming cash-rich buyers pick these houses up at record low prices, what are they going to do with them? Rent them out! Bingo, lots more rental properties on the market will push rental prices down along with home prices.

I think it will be deflationary all around in housing, both in rent cost as well as home prices. People would moonwalk in huge numbers right into similar rentals discounted 30% also. Or, even better, they can just stop paying their mortgage, save the cash, wait 18 months for the foreclosure process to complete and then plop down cash for one of the new cheap houses!

In an immoral society, those with the most morals are destroyed first.[/quote]
Again, I don’t think everyone would walk. Only those who depend on the deduction to make their mortgage comparable to rent. All the people who are paying less for mortgage than rent of similar house wouldn’t walk. I know I wouldn’t. All the people I know who are near or at retirement and own anywhere between $20k-100k left on their SFR wouldn’t walk either. Since their mortgage are currently well < $1k/month. They can't even rent a 1/1 apartment for that monthly payment. I can see a squish down but I don't see price dropping drastically bellow rent. If it does, you'll see many more investors jumping in to push up prices. I also don't think rent will take a whack either. Rent didn't drop 30-50% from 2005 like housing price.

[an]

[quote=CONCHO]I think if they really phased the deduction out, home prices would drop drastically. Assuming cash-rich buyers pick these houses up at record low prices, what are they going to do with them? Rent them out! Bingo, lots more rental properties on the market will push rental prices down along with home prices.

I think it will be deflationary all around in housing, both in rent cost as well as home prices. People would moonwalk in huge numbers right into similar rentals discounted 30% also. Or, even better, they can just stop paying their mortgage, save the cash, wait 18 months for the foreclosure process to complete and then plop down cash for one of the new cheap houses!

In an immoral society, those with the most morals are destroyed first.[/quote]
Again, I don’t think everyone would walk. Only those who depend on the deduction to make their mortgage comparable to rent. All the people who are paying less for mortgage than rent of similar house wouldn’t walk. I know I wouldn’t. All the people I know who are near or at retirement and own anywhere between $20k-100k left on their SFR wouldn’t walk either. Since their mortgage are currently well < $1k/month. They can't even rent a 1/1 apartment for that monthly payment. I can see a squish down but I don't see price dropping drastically bellow rent. If it does, you'll see many more investors jumping in to push up prices. I also don't think rent will take a whack either. Rent didn't drop 30-50% from 2005 like housing price.

[an]

[quote=CONCHO]I think if they really phased the deduction out, home prices would drop drastically. Assuming cash-rich buyers pick these houses up at record low prices, what are they going to do with them? Rent them out! Bingo, lots more rental properties on the market will push rental prices down along with home prices.

I think it will be deflationary all around in housing, both in rent cost as well as home prices. People would moonwalk in huge numbers right into similar rentals discounted 30% also. Or, even better, they can just stop paying their mortgage, save the cash, wait 18 months for the foreclosure process to complete and then plop down cash for one of the new cheap houses!

In an immoral society, those with the most morals are destroyed first.[/quote]
Again, I don’t think everyone would walk. Only those who depend on the deduction to make their mortgage comparable to rent. All the people who are paying less for mortgage than rent of similar house wouldn’t walk. I know I wouldn’t. All the people I know who are near or at retirement and own anywhere between $20k-100k left on their SFR wouldn’t walk either. Since their mortgage are currently well < $1k/month. They can't even rent a 1/1 apartment for that monthly payment. I can see a squish down but I don't see price dropping drastically bellow rent. If it does, you'll see many more investors jumping in to push up prices. I also don't think rent will take a whack either. Rent didn't drop 30-50% from 2005 like housing price.

[ucodegen]

[quote briansd1]
President Obama’s proposal is a modest rollback of the MID.

The president once again proposed in his budget to curtail high-income earners’ tax deduction for mortgage interest payments and charitable contributions.

Under his proposal, taxpayers in the 33% and 35% tax brackets would only be able to deduct their contributions and mortgage interest payments at the 28% rate. It would affect those with taxable income of $250,000 and up and bring in $321 billion over 10 years, according to the White House

http://money.cnn.com/2011/02/15/news/economy/mortgage_interest_deduction/index.htm

[/quote]
The problem is that there is a way around the elimination of the mortgage interest deduction. The deduction was written into code to harmonize the corporate tax laws with the individual tax laws and allow everyone the deduction that the upper income people were getting through skillful tax attorneys. This change will only make our tax laws yet more byzantine.

The other aspect is that the MID pushes the RE prices up and property tax is initially based on the price sold. The politicians really don’t want to eliminate it because it would reduce a source of funding..

[ucodegen]

[quote briansd1]
President Obama’s proposal is a modest rollback of the MID.

The president once again proposed in his budget to curtail high-income earners’ tax deduction for mortgage interest payments and charitable contributions.

Under his proposal, taxpayers in the 33% and 35% tax brackets would only be able to deduct their contributions and mortgage interest payments at the 28% rate. It would affect those with taxable income of $250,000 and up and bring in $321 billion over 10 years, according to the White House

http://money.cnn.com/2011/02/15/news/economy/mortgage_interest_deduction/index.htm

[/quote]
The problem is that there is a way around the elimination of the mortgage interest deduction. The deduction was written into code to harmonize the corporate tax laws with the individual tax laws and allow everyone the deduction that the upper income people were getting through skillful tax attorneys. This change will only make our tax laws yet more byzantine.

The other aspect is that the MID pushes the RE prices up and property tax is initially based on the price sold. The politicians really don’t want to eliminate it because it would reduce a source of funding..

[ucodegen]

[quote briansd1]
President Obama’s proposal is a modest rollback of the MID.

The president once again proposed in his budget to curtail high-income earners’ tax deduction for mortgage interest payments and charitable contributions.

Under his proposal, taxpayers in the 33% and 35% tax brackets would only be able to deduct their contributions and mortgage interest payments at the 28% rate. It would affect those with taxable income of $250,000 and up and bring in $321 billion over 10 years, according to the White House

http://money.cnn.com/2011/02/15/news/economy/mortgage_interest_deduction/index.htm

[/quote]
The problem is that there is a way around the elimination of the mortgage interest deduction. The deduction was written into code to harmonize the corporate tax laws with the individual tax laws and allow everyone the deduction that the upper income people were getting through skillful tax attorneys. This change will only make our tax laws yet more byzantine.

The other aspect is that the MID pushes the RE prices up and property tax is initially based on the price sold. The politicians really don’t want to eliminate it because it would reduce a source of funding..

[ucodegen]

[quote briansd1]
President Obama’s proposal is a modest rollback of the MID.

The president once again proposed in his budget to curtail high-income earners’ tax deduction for mortgage interest payments and charitable contributions.

Under his proposal, taxpayers in the 33% and 35% tax brackets would only be able to deduct their contributions and mortgage interest payments at the 28% rate. It would affect those with taxable income of $250,000 and up and bring in $321 billion over 10 years, according to the White House

http://money.cnn.com/2011/02/15/news/economy/mortgage_interest_deduction/index.htm

[/quote]
The problem is that there is a way around the elimination of the mortgage interest deduction. The deduction was written into code to harmonize the corporate tax laws with the individual tax laws and allow everyone the deduction that the upper income people were getting through skillful tax attorneys. This change will only make our tax laws yet more byzantine.

The other aspect is that the MID pushes the RE prices up and property tax is initially based on the price sold. The politicians really don’t want to eliminate it because it would reduce a source of funding..

[ucodegen]

[quote briansd1]
President Obama’s proposal is a modest rollback of the MID.

The president once again proposed in his budget to curtail high-income earners’ tax deduction for mortgage interest payments and charitable contributions.

Under his proposal, taxpayers in the 33% and 35% tax brackets would only be able to deduct their contributions and mortgage interest payments at the 28% rate. It would affect those with taxable income of $250,000 and up and bring in $321 billion over 10 years, according to the White House

http://money.cnn.com/2011/02/15/news/economy/mortgage_interest_deduction/index.htm

[/quote]
The problem is that there is a way around the elimination of the mortgage interest deduction. The deduction was written into code to harmonize the corporate tax laws with the individual tax laws and allow everyone the deduction that the upper income people were getting through skillful tax attorneys. This change will only make our tax laws yet more byzantine.

The other aspect is that the MID pushes the RE prices up and property tax is initially based on the price sold. The politicians really don’t want to eliminate it because it would reduce a source of funding..

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