Popular mortgage deduction could get a haircut in tax reform

cawacko said:
Negotiating chip or will Trump et al really push to reduce it?




Popular mortgage deduction could get a haircut in tax reform


The mortgage interest tax deduction has long been considered politically untouchable — until now, that is.

The hands-down favorite of taxpayers is back on the negotiating table as tax reform kicks into high gear, according to industry sources, even though no one from the Trump administration has said that out loud, and Republican leaders in Congress say not to worry.

"Saying they aren't going to get rid of it isn't saying they won't touch it," said one source who agreed to speak only on background. "There are clearly discussions going on around reducing the maximum of the mortgage interest deduction to the $600,000 range."

The mortgage interest deduction, which only benefits about 20 percent of taxpayers, is currently capped at loans up to $1 million for married couples who file jointly and at $500,000 for individual filers. The median value of a U.S. home just crossed the $200,000 market, according to Zillow, so not a lot of people make it to that cap. More than half of those who benefit from the deduction have incomes above $100,000, and they get 81 percent of the benefit, according to the Congressional Joint Committee on Taxation. The benefit cost the U.S. government $77 billion in 2016.

As recently as Monday, Senate Majority Leader Mitch McConnell said if you're worried about the mortgage interest deduction, "you can breathe easy." A rep in McConnell's office declined to elaborate.

Capping the popular deduction at loans no higher than $500,000 would affect only 4 percent of borrowers but 15 percent of the dollar volume, since the deduction is so skewed toward higher income taxpayers. Still, the administration could use it as a bargaining chip to change the standard deduction.

Altering the standard deduction so very few people will want to take it is "kind of an elegant way to water down, if not neuter, the mortgage interest deduction," said Guy Cecala, CEO of Inside Mortgage Finance. "If you're a taxpayer and your taxes go down by not taking the deduction, how can you say that's a bad thing?"

No question, however, that the industry, especially the National Association of Realtors, will lobby hard against any changes. While there is no evidence that the deduction spurs home buying, it does make certain homes more affordable for some buyers.


https://www.cnbc.com/2017/08/22/popular-mortgage-deduction-could-get-a-haircut-in-tax-reform.html
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This would be a disastrous decision right now, especially if 1% gets tax cuts
 
Covfefe said:
This would be a disastrous decision right now, especially if 1% gets tax cuts
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Why? This benefits the rich and middle class at the expense of the poor. How do you (we) justify that? Especially since the discussion is about putting a cap on the amount which only affects the richest
 
aloysious said:
Of course not but it helps, no?
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No. It is a money loser

Let's say you are in the 25% tax bracket. You are essentially paying $.75 in order to get $.25 back.

Let me put it this way. If I tell you to give me $100 every month and I will give you $25, would you think that is a good deal?
 
archives said:
Ain't happening, middle class benefit, and the last thing any politician in this day in age is going to do is offend the mythological middle class, big part of Schedule A, especially for first time home buyers
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lol....cutting the annual mortgage interest deduction from $1M to $600K is NOT a middle class benefit......the annual mortgage interest on a $2M house, if totally financed is only around $60K
 
cawacko said:
Why? This benefits the rich and middle class at the expense of the poor. How do you (we) justify that? Especially since the discussion is about putting a cap on the amount which only affects the richest
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I'm just telling you it won't be good politically, I'm not going to argue fairness with you. Our tax code definitely needs to be changed, but taking mortgage deductions won't be met with cheers.
 
archives said:
First time home buyers live across the country, and it is a big part of their deductions, political kryptonite no matter where one lives

What they ought to do is limit it to primary residency, it shouldn't apply to the guy who buys a camp or second residence
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the proposed cut will have no impact on 1st time home buyers.......unless of course that first home costs more than $20 million......
 
Covfefe said:
I'm just telling you it won't be good politically, I'm not going to argue fairness with you. Our tax code definitely needs to be changed, but taking mortgage deductions won't be met with cheers.
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Why would most Americans be upset that rich people can deduct less on their homes?
 
Alice in Liberaland said:
No. It is a money loser

Let's say you are in the 25% tax bracket. You are essentially paying $.75 in order to get $.25 back.
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/boggle.....no......you are paying $.75 to buy a house......your tax deduction saves you $.25

Let me put it this way. If I tell you to give me $100 every month and I will give you $25, would you think that is a good deal?
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yes, if you've given me the money to buy a house........who wouldn't.....
 
archives said:
First time home buyers live across the country, and it is a big part of their deductions, political kryptonite no matter where one lives

What they ought to do is limit it to primary residency, it shouldn't apply to the guy who buys a camp or second residence
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Yes...they can certainly narrow the scope.

And they should do away with carried interest, which was one of trump's first campaign promises. After the Mexican rapist thing, that is.
 
PostmodernProphet said:
/boggle.....no......you are paying $.75 to buy a house......your tax deduction saves you $.25



yes, if you've given me the money to buy a house........who wouldn't.....
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It is still a money loser. Paying cash or as fast as possible is the best way to go.

Eliminate deduction, lower rates and cut spending
 
Alice in Liberaland said:
Paid cash for my mountain retreat

Mortgages are a modern day creation by the bankstas and the gobblement.

30 year mortgage? Scam

If you are going to do mortgage no more than 15
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/shrugs.....so you don't believe in mortgages and you have a mountain retreat.......I believe in mortgages and I've had my home and 37 rental properties over the years......and those "modern day" creations are mentioned in the Old Testamentt......
 
Alice in Liberaland said:
Take a $600,000 mortgage. Using 3.25% interest and a 30 year mortgage, you will pay back $340,000 in interest over the life of that loan.

No mortgage interest deduction will cover that


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with due respect my fellow conservative,

To most of us we break it down a little differently than you propose, which is all true by the way.
but
We have to live somewhere, it's either pay rent or own. Most rents for a decent place to live are not much lower if any than what a mortgage payment would be anyway.
The dilemma is coming up with the down payment to get into a mortgage.

So once you have done that you basically struggle all year just as you would have paying rent, but every April you get a big check from the Government, granted just giving you your own money back but
it fills the account back up a bit so we can struggle another year and do it all over again.
Theres no third choice.

You take that deduction away there are going to be a lot of angry Americans, working class doing all the right things Americans who are going to know exactly where to put the blame.
The Democrats are loaded for bear to stop anything Trump is trying to do.

In addition by the way he wants to double our standard deduction, another few thousand dollars back in our pocket.
Democrats obstruct if you must. We're wacthing
 
Getin the ring said:
with due respect my fellow conservative,

To most of us we break it down a little differently than you propose, which is all true by the way.
but
We have to live somewhere, it's either pay rent or own. Most rents for a decent place to live are not much lower if any than what a mortgage payment would be anyway.
The dilemma is coming up with the down payment to get into a mortgage.

So once you have done that you basically struggle all year just as you would have paying rent, but every April you get a big check from the Government, granted just giving you your own money back but
it fills the account back up a bit so we can struggle another year and do it all over again.
Theres no third choice.

You take that deduction away there are going to be a lot of angry Americans, working class doing all the right things Americans who are going to know exactly where to put the blame.
The Democrats are loaded for bear to stop anything Trump is trying to do.

In addition by the way he wants to double our standard deduction, another few thousand dollars back in our pocket.
Democrats obstruct if you must. We're wacthing
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What has been discussed is capping the deduction amount which only the top 4% pay. If you're in that top four percent you are not working class.

The M.I.D. heavily benefits the rich and middle class and ultimately distorts the market. If you're working class you should have no problem with this being gone. You're getting too caught up in rep vs dem and missing the forest for the trees
 
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