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Thread: Mortgage Interest Deduction

  1. #121
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    Re: Mortgage Interest Deduction

    Quote Originally Posted by Critter7r View Post
    Which would indicate that is an unnecessary incentive to foster home ownership, it's original stated cause.



    Newsflash : Most people already do just let the equity in their homes just sit there benefitting no one.

    Most people don't have enough cash sitting around to buy a house and say, "you know what, **** it, I'm just going to take this money and buy an annuity and take out a loan for the house." 75% of homeowners don't - and never did - have anywhere near that kind of cash lying around.
    Too bad. Maybe they should be more frugal, then they would.

    Hint: remortgaging the house is also a good way to force savings.

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    Re: Mortgage Interest Deduction

    Quote Originally Posted by calamity View Post
    Too bad. Maybe they should be more frugal, then they would.

    Hint: remortgaging the house is also a good way to force savings.
    How does one save up enough money to buy - outright - even a $100k house while earning say, $40k per year? Save up for 20 years?
    I'm not going to chase you while you run around with the goalpost in your arms.

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    Re: Mortgage Interest Deduction

    Quote Originally Posted by Critter7r View Post
    How does one save up enough money to buy - outright - even a $100k house while earning say, $40k per year? Save up for 20 years?
    Making more than $40K per year would be a good start. And then, spending about $1K less per month will geet you there quick.

  4. #124
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    Re: Mortgage Interest Deduction

    Quote Originally Posted by Moderate Right View Post
    I was reading something the other day where Trump was *considering the possibility* of eliminating the mortgage interest deduction while working on a tax cut package. Apparently many who rail against income inequality claim that the mortgage interest deduction increases income inequality because it favors the wealthy over the poor so eliminating this would be a way to kind of reverse this. I can see that viewpoint from their perspective. Now I don't really want to make this thread about tax cuts at all but about a debate over the mortgage interest deduction as to whether it should be kept or not or reworked in some fashion. I personally think people should be encouraged to buy homes but I wouldn't be against phasing out the deduction at rising income levels. In most cases I would also be against mortgage interest deductions for second homes except in very specific situations, oddly enough lawmakers who need a second home in DC as well as their home in their home states, comes to mind.
    The mortgage interest deduction is so ingrained into our system that it would take years to work it's way through the process. Trump could start it, but I don't think he'd finish it, even if he does serve two full terms.

    I advocate eventual elimination, but I know that many people are vehemently opposed.
    The same people who say we need guns to protect us from the tyranny of government
    also say we should give complete blind faith and obedience to the police… which is part of government…
    the very people that would be the ones being tyrannical.

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    Re: Mortgage Interest Deduction

    Quote Originally Posted by cpwill View Post
    No. Making debt (and housing debt) tax free has not worked out well for us. It helped fuel a bubble, and benefits special interests with nothing in return to the general welfare.


    If you cannot afford a house without a tax deduction on the interest you pay in your mortgage payment, then you cannot afford the house, and shouldn't be buying one. Buying one in that scenario because you are teased in with "oh but deduction on the interest" is penny wise and pound foolish, and you will regret it.
    It encouraged home ownership and provided stability. But, like so many other government things, its purpose has been accomplished and is now just an entitlement of sorts.

    I do know people that buy bigger houses because of the deduction, and I have had people tell me they'd never be able to afford the house they have without it when the subject comes up in conversation, which speaks to you point in the present day.
    The same people who say we need guns to protect us from the tyranny of government
    also say we should give complete blind faith and obedience to the police… which is part of government…
    the very people that would be the ones being tyrannical.

  6. #126
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    Re: Mortgage Interest Deduction

    Quote Originally Posted by calamity View Post
    Making more than $40K per year would be a good start. And then, spending about $1K less per month will geet you there quick.
    I dont know that Id call 100 months "quick". Nor that spending $12k less per year is an option for someone already spending only about $35k. ($40k after taxes)

    Sent from my SM-G360V using Tapatalk
    I'm not going to chase you while you run around with the goalpost in your arms.

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    Re: Mortgage Interest Deduction

    Quote Originally Posted by Critter7r View Post
    I dont know that Id call 100 months "quick". Nor that spending $12k less per year is an option for someone already spending only about $35k. ($40k after taxes)

    Sent from my SM-G360V using Tapatalk
    lol...it starts by buying your first house on credit, paying a few extra bucks every month and adding some elbow grease to build equity, then selling it at a profit. Next, you buy another house but with more money down. As a result, you end up with a lower monthly payment. Again, instead of pissing away the extra money, you plow it back into the house by making extra payments. Rinse, repeat.

    Before long, you're sitting on that 100-G's of equity and you can buy that next house in cash by kicking in a few bucks from an investment account. Point is, why do that if interest rates are at 4% and the mortgage deduction drops it to an effective out of pocket below 3%? Betetr off keeping the money in investments, most of which yield 5 to 8%.

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    Re: Mortgage Interest Deduction

    Quote Originally Posted by ttwtt78640 View Post
    Yes "the dude" does have more money left in his pocket - rental of the same size home would be more expensive and his taxation would remain higher. Add to that the likely appreciation of the property (plus added equity) and not only did "the dude's" disposable income increase so did "the dude's" net worth.
    You are talking about the benefits of home ownership - not the mortgage industry subsidy that I was describing.

    Mortgage interest deduction can still go away in my book.

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    Re: Mortgage Interest Deduction

    Quote Originally Posted by Nuber View Post
    You are talking about the benefits of home ownership - not the mortgage industry subsidy that I was describing.

    Mortgage interest deduction can still go away in my book.
    Exactly, but many were trying to say that home ownership was only possible because of the special federal income treatment that it receives. Each and every special tax perk (deduction, credit, exclusion or special accounting method) has folks that benefit from it that will (try to) defend it as necessary to the economy.

    One of the biggest examples of of an industry subsidy provided by the federal incone tax code is medical care insurance. Employers pay money to insurance companies, on behalf of and to directly benefit their individual employees, yet that does not count as employee income - this is not (yet?) allowed for other forms of direct employee benefit, or example, an employer can't pay an employee's mortgage, auto insurance or utilities on their behalf and thus have that portion of employee compensation (direct labor cost written off by the empoyer) no longer be considered as taxable income to the employee.
    “The reasonable man adapts himself to the world: the unreasonable one persists to adapt the world to himself.
    Therefore all progress depends on the unreasonable man.” ― George Bernard Shaw, Man and Superman

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