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Wednesday, February 6, 2008

Is the mortgage interest deduction fair?

While filing my taxes using TaxAct, I clicked on a pop-up that gave me tax tips for 2008. One interesting suggestion that had was to own a home.
A Real Tax Shelter
Purchasing a home is one of the best tax shelters available. The interest and points that you pay for the purchase are deductible as itemized deductions. The property taxes that you pay on the home are also deductible as itemized deductions. Best of all, when you sell the home, you probably will not need to pay any tax at all on the gain. There is no other investment that can provide the tax advantages like home ownership.

Though it was a friendly little tip, it got me thinking and got me a little mad. Why is does owning a home provide such great tax benefits? (Deductions for dependents is another story.... But raising kids is ridiculously expensive so this doesn't bother me much.) Is it fair? If so, why is it fair? Do most developed countries do this? Where did this idea come from? Of course, popular belief is that the main reason is to encourage people to own homes. It is the American Dream. But why? Why does the government want to encourage home ownership for everyone? Why am I seen less favorably because I'm priced out and relatively uninterested in locking myself to a property?

How about another viewpoint? The New York Times says that is simply a nice "American folk legend: the government invented the mortgage-interest deduction to help people buy their own homes, and the level of homeownership has risen ever since." The real story, they claim, is much less middle class friendly. It stems from the government originally having all interest as deductible, which was really intended to help business. The average American didn't have a mortgage (or credit card) and wasn't paying interest in the first place (can you believe that!), so interest was a business expense and therefore deductible. Later this broad rule was changed, for obvious reasons, but the mortgage interest stayed (for less obvious reasons.) Further, the author claims tax is actually regressive with "the rewards are greatly skewed in favor of the moderately to the conspicuously rich." Wow. This is stuff I'd never heard of before. I will stop myself from regurgitating the whole article, but it is a great read!

So, how much of an impact does this really make on me anyway? I assume if you own property, you must itemize deductions. I generally take the standard deduction. What kind of itemized deduction would someone on my salary with property get, assuming my rent is equal to their housing expenses? It would be an interesting exercise. The more expensive the house, the bigger the difference.

Ho much impact does it make on the government? A lot, actually: "The mortgage-interest deduction. We all love the deduction for home-mortgage interest. But renters and those who own their homes free and clear get nothing. Cost to the government: $402.7 billion." That number is from 2006.

If most people are deducting mortgage interest, why can't I deduct anything for my rent? There is interest and taxes built into the price of my apartment. Is someone else taking those deductions for me? Actually, a few states do allow a small tax break for renters, based on the fact that we indirectly are paying someone else's property taxes. In California, it is only for senior citizens with low incomes. Yet you can deduct interest on mortgages values over $1 million.

What can a renter do? This article suggests deducting student loan interest (which saved me a couple hundred this year) or a hybrid car deduction (can't afford a hybrid). For some reason, I don't feel like that evens things out at all. Apparently all I can do is write my congressman or buy a house.

What do you think? And is your view skewed by the fact that you either do or do not own property? Is it possible that eliminating this deduction could actually benefit the majority of people?

9 comments:

Ernesto said...

If you think mortgage interest is unfair, let's hope you never bump across deductions small business owners are allowed.

Imagine you could expense everything you bought, small business people are not far from that. Ever wonder why so many people buy Hummers? There's a write off for vehicles over 6000 pounds. So about everytime you see a Suburban, Lincoln Navagator or Escalade someone took a pre-tax write off (Up to $125,000).
Office expenses, postage, trips to Lowes, mileage, you name it and someone is writing it off on their taxes business related or not.

minimum wage said...

It's not fair, but politics isn't about being fair. Sometimes it's about helping your contributors and supporters, sometimes it's about social engineering, but it's not about being fair.

Homeowners are like a sacred voting bloc, politicians pander to them. That's why homeowners get lower property tax rates than rental property in most states Homeowners cast the vast majority of votes in this country, and politicians know on which side their bread - and vote - is buttered.

In addition to the reasons above, there is actually a very good reason - one grounded in accounting principle - that renters don't get a deduction for rent.

There already exists a deduction for rent, but your landlord enjoys it as a rental business expense on Schedule E.

Frugal Bachelor said...

Awesome post, I agree 100%, and you said it much better than I could. Thanks for the very interesting NY Times link. Your post inspires me to put "link roundup" on my own blog which I will do if I can find some more good posts to include alongside yours.

BTW, I think property taxes are enough punishment in return for deducting mortgage interest. Although they are deductible also ..

SJean said...

True they pay property taxes, but through my rent, I'm sure I'm helping pay some property taxes somewhere along the line.

MEG said...

The tax breaks are beneficial for the government, actually. The incentives in the form of tax breaks keeps people buying homes (and makes it more affordable for people to do so). This raises prices AND increases the number of homes. Both things increase tax revenue in the form of property taxes.

Also, the breaks benefit the economy (which benefits the govn in the form of income taxes and the prosperity of the average American in general). Housing is a huge part of the economy from builders to developers to title companies to banks to lowe's and Home Depot to manufacturers who make everything we put in our homes. As we've seen, when the housing market suffers so does the whole economy.

PLUS those tax breaks are designed for real estate INVESTORS as well. The government needs people who are willing to build, buy, and manage apartment buildings or else they would have to come up with their own way to house our exploding population!

SJean said...

I really don't agree that it is beneficial to the gov't to subsidize this by 400 billion, or more. Would people really NOT buy houses if the tax breaks weren't there? I think in most cases, people who wanted to buy, would. Do you NEED that break in order to afford your condo? Nah, it's just a neat perk. The tax burden would be shifted, but the average person wouldn't notice a big tax increase.

There would still be profit to be made in rental property, without the tax breaks. My rent is X dollars, I assume it is costing the complex much less than X dollars for my tiny apartment.

BUT, I have a feeling that you and I have quite different political/economic veiws, so I can agree to disagree.

Well-Heeled said...

SJean - that is a really interesting article! In fact, one of the reasons that my mom encourages me to buy as soon as possible is to take advantage of the tax break.

The article made alot of sense - in both that the deduction primarily benefits middle-to-upper-class people and how difficult it would be to repeal.

The short history of how the deducation came about is also fascinating.

Anonymous said...

What does fairness have to do with it?

On the flip side of the coin, in Massachusetts the mortgage interest is not deductible, but renters can deduct up to 50% of up to $6,000 a year in rent - provided they identify who they paid the rent to. My personal opinion is the state does that just to make sure the landlords are paying their taxes properly, because the cash value of the deduction is limited to about $159 per renter.

SJean said...

I wish I would have titled it "Is the mortgage interest deduction good for us?" Us as in, the country as a whole.

$159 is not going to help me much....

Wednesday, February 6, 2008

Is the mortgage interest deduction fair?

While filing my taxes using TaxAct, I clicked on a pop-up that gave me tax tips for 2008. One interesting suggestion that had was to own a home.
A Real Tax Shelter
Purchasing a home is one of the best tax shelters available. The interest and points that you pay for the purchase are deductible as itemized deductions. The property taxes that you pay on the home are also deductible as itemized deductions. Best of all, when you sell the home, you probably will not need to pay any tax at all on the gain. There is no other investment that can provide the tax advantages like home ownership.

Though it was a friendly little tip, it got me thinking and got me a little mad. Why is does owning a home provide such great tax benefits? (Deductions for dependents is another story.... But raising kids is ridiculously expensive so this doesn't bother me much.) Is it fair? If so, why is it fair? Do most developed countries do this? Where did this idea come from? Of course, popular belief is that the main reason is to encourage people to own homes. It is the American Dream. But why? Why does the government want to encourage home ownership for everyone? Why am I seen less favorably because I'm priced out and relatively uninterested in locking myself to a property?

How about another viewpoint? The New York Times says that is simply a nice "American folk legend: the government invented the mortgage-interest deduction to help people buy their own homes, and the level of homeownership has risen ever since." The real story, they claim, is much less middle class friendly. It stems from the government originally having all interest as deductible, which was really intended to help business. The average American didn't have a mortgage (or credit card) and wasn't paying interest in the first place (can you believe that!), so interest was a business expense and therefore deductible. Later this broad rule was changed, for obvious reasons, but the mortgage interest stayed (for less obvious reasons.) Further, the author claims tax is actually regressive with "the rewards are greatly skewed in favor of the moderately to the conspicuously rich." Wow. This is stuff I'd never heard of before. I will stop myself from regurgitating the whole article, but it is a great read!

So, how much of an impact does this really make on me anyway? I assume if you own property, you must itemize deductions. I generally take the standard deduction. What kind of itemized deduction would someone on my salary with property get, assuming my rent is equal to their housing expenses? It would be an interesting exercise. The more expensive the house, the bigger the difference.

Ho much impact does it make on the government? A lot, actually: "The mortgage-interest deduction. We all love the deduction for home-mortgage interest. But renters and those who own their homes free and clear get nothing. Cost to the government: $402.7 billion." That number is from 2006.

If most people are deducting mortgage interest, why can't I deduct anything for my rent? There is interest and taxes built into the price of my apartment. Is someone else taking those deductions for me? Actually, a few states do allow a small tax break for renters, based on the fact that we indirectly are paying someone else's property taxes. In California, it is only for senior citizens with low incomes. Yet you can deduct interest on mortgages values over $1 million.

What can a renter do? This article suggests deducting student loan interest (which saved me a couple hundred this year) or a hybrid car deduction (can't afford a hybrid). For some reason, I don't feel like that evens things out at all. Apparently all I can do is write my congressman or buy a house.

What do you think? And is your view skewed by the fact that you either do or do not own property? Is it possible that eliminating this deduction could actually benefit the majority of people?

9 comments:

Ernesto said...

If you think mortgage interest is unfair, let's hope you never bump across deductions small business owners are allowed.

Imagine you could expense everything you bought, small business people are not far from that. Ever wonder why so many people buy Hummers? There's a write off for vehicles over 6000 pounds. So about everytime you see a Suburban, Lincoln Navagator or Escalade someone took a pre-tax write off (Up to $125,000).
Office expenses, postage, trips to Lowes, mileage, you name it and someone is writing it off on their taxes business related or not.

minimum wage said...

It's not fair, but politics isn't about being fair. Sometimes it's about helping your contributors and supporters, sometimes it's about social engineering, but it's not about being fair.

Homeowners are like a sacred voting bloc, politicians pander to them. That's why homeowners get lower property tax rates than rental property in most states Homeowners cast the vast majority of votes in this country, and politicians know on which side their bread - and vote - is buttered.

In addition to the reasons above, there is actually a very good reason - one grounded in accounting principle - that renters don't get a deduction for rent.

There already exists a deduction for rent, but your landlord enjoys it as a rental business expense on Schedule E.

Frugal Bachelor said...

Awesome post, I agree 100%, and you said it much better than I could. Thanks for the very interesting NY Times link. Your post inspires me to put "link roundup" on my own blog which I will do if I can find some more good posts to include alongside yours.

BTW, I think property taxes are enough punishment in return for deducting mortgage interest. Although they are deductible also ..

SJean said...

True they pay property taxes, but through my rent, I'm sure I'm helping pay some property taxes somewhere along the line.

MEG said...

The tax breaks are beneficial for the government, actually. The incentives in the form of tax breaks keeps people buying homes (and makes it more affordable for people to do so). This raises prices AND increases the number of homes. Both things increase tax revenue in the form of property taxes.

Also, the breaks benefit the economy (which benefits the govn in the form of income taxes and the prosperity of the average American in general). Housing is a huge part of the economy from builders to developers to title companies to banks to lowe's and Home Depot to manufacturers who make everything we put in our homes. As we've seen, when the housing market suffers so does the whole economy.

PLUS those tax breaks are designed for real estate INVESTORS as well. The government needs people who are willing to build, buy, and manage apartment buildings or else they would have to come up with their own way to house our exploding population!

SJean said...

I really don't agree that it is beneficial to the gov't to subsidize this by 400 billion, or more. Would people really NOT buy houses if the tax breaks weren't there? I think in most cases, people who wanted to buy, would. Do you NEED that break in order to afford your condo? Nah, it's just a neat perk. The tax burden would be shifted, but the average person wouldn't notice a big tax increase.

There would still be profit to be made in rental property, without the tax breaks. My rent is X dollars, I assume it is costing the complex much less than X dollars for my tiny apartment.

BUT, I have a feeling that you and I have quite different political/economic veiws, so I can agree to disagree.

Well-Heeled said...

SJean - that is a really interesting article! In fact, one of the reasons that my mom encourages me to buy as soon as possible is to take advantage of the tax break.

The article made alot of sense - in both that the deduction primarily benefits middle-to-upper-class people and how difficult it would be to repeal.

The short history of how the deducation came about is also fascinating.

Anonymous said...

What does fairness have to do with it?

On the flip side of the coin, in Massachusetts the mortgage interest is not deductible, but renters can deduct up to 50% of up to $6,000 a year in rent - provided they identify who they paid the rent to. My personal opinion is the state does that just to make sure the landlords are paying their taxes properly, because the cash value of the deduction is limited to about $159 per renter.

SJean said...

I wish I would have titled it "Is the mortgage interest deduction good for us?" Us as in, the country as a whole.

$159 is not going to help me much....

Wednesday, February 6, 2008

Is the mortgage interest deduction fair?

While filing my taxes using TaxAct, I clicked on a pop-up that gave me tax tips for 2008. One interesting suggestion that had was to own a home.
A Real Tax Shelter
Purchasing a home is one of the best tax shelters available. The interest and points that you pay for the purchase are deductible as itemized deductions. The property taxes that you pay on the home are also deductible as itemized deductions. Best of all, when you sell the home, you probably will not need to pay any tax at all on the gain. There is no other investment that can provide the tax advantages like home ownership.

Though it was a friendly little tip, it got me thinking and got me a little mad. Why is does owning a home provide such great tax benefits? (Deductions for dependents is another story.... But raising kids is ridiculously expensive so this doesn't bother me much.) Is it fair? If so, why is it fair? Do most developed countries do this? Where did this idea come from? Of course, popular belief is that the main reason is to encourage people to own homes. It is the American Dream. But why? Why does the government want to encourage home ownership for everyone? Why am I seen less favorably because I'm priced out and relatively uninterested in locking myself to a property?

How about another viewpoint? The New York Times says that is simply a nice "American folk legend: the government invented the mortgage-interest deduction to help people buy their own homes, and the level of homeownership has risen ever since." The real story, they claim, is much less middle class friendly. It stems from the government originally having all interest as deductible, which was really intended to help business. The average American didn't have a mortgage (or credit card) and wasn't paying interest in the first place (can you believe that!), so interest was a business expense and therefore deductible. Later this broad rule was changed, for obvious reasons, but the mortgage interest stayed (for less obvious reasons.) Further, the author claims tax is actually regressive with "the rewards are greatly skewed in favor of the moderately to the conspicuously rich." Wow. This is stuff I'd never heard of before. I will stop myself from regurgitating the whole article, but it is a great read!

So, how much of an impact does this really make on me anyway? I assume if you own property, you must itemize deductions. I generally take the standard deduction. What kind of itemized deduction would someone on my salary with property get, assuming my rent is equal to their housing expenses? It would be an interesting exercise. The more expensive the house, the bigger the difference.

Ho much impact does it make on the government? A lot, actually: "The mortgage-interest deduction. We all love the deduction for home-mortgage interest. But renters and those who own their homes free and clear get nothing. Cost to the government: $402.7 billion." That number is from 2006.

If most people are deducting mortgage interest, why can't I deduct anything for my rent? There is interest and taxes built into the price of my apartment. Is someone else taking those deductions for me? Actually, a few states do allow a small tax break for renters, based on the fact that we indirectly are paying someone else's property taxes. In California, it is only for senior citizens with low incomes. Yet you can deduct interest on mortgages values over $1 million.

What can a renter do? This article suggests deducting student loan interest (which saved me a couple hundred this year) or a hybrid car deduction (can't afford a hybrid). For some reason, I don't feel like that evens things out at all. Apparently all I can do is write my congressman or buy a house.

What do you think? And is your view skewed by the fact that you either do or do not own property? Is it possible that eliminating this deduction could actually benefit the majority of people?

9 comments:

Ernesto said...

If you think mortgage interest is unfair, let's hope you never bump across deductions small business owners are allowed.

Imagine you could expense everything you bought, small business people are not far from that. Ever wonder why so many people buy Hummers? There's a write off for vehicles over 6000 pounds. So about everytime you see a Suburban, Lincoln Navagator or Escalade someone took a pre-tax write off (Up to $125,000).
Office expenses, postage, trips to Lowes, mileage, you name it and someone is writing it off on their taxes business related or not.

minimum wage said...

It's not fair, but politics isn't about being fair. Sometimes it's about helping your contributors and supporters, sometimes it's about social engineering, but it's not about being fair.

Homeowners are like a sacred voting bloc, politicians pander to them. That's why homeowners get lower property tax rates than rental property in most states Homeowners cast the vast majority of votes in this country, and politicians know on which side their bread - and vote - is buttered.

In addition to the reasons above, there is actually a very good reason - one grounded in accounting principle - that renters don't get a deduction for rent.

There already exists a deduction for rent, but your landlord enjoys it as a rental business expense on Schedule E.

Frugal Bachelor said...

Awesome post, I agree 100%, and you said it much better than I could. Thanks for the very interesting NY Times link. Your post inspires me to put "link roundup" on my own blog which I will do if I can find some more good posts to include alongside yours.

BTW, I think property taxes are enough punishment in return for deducting mortgage interest. Although they are deductible also ..

SJean said...

True they pay property taxes, but through my rent, I'm sure I'm helping pay some property taxes somewhere along the line.

MEG said...

The tax breaks are beneficial for the government, actually. The incentives in the form of tax breaks keeps people buying homes (and makes it more affordable for people to do so). This raises prices AND increases the number of homes. Both things increase tax revenue in the form of property taxes.

Also, the breaks benefit the economy (which benefits the govn in the form of income taxes and the prosperity of the average American in general). Housing is a huge part of the economy from builders to developers to title companies to banks to lowe's and Home Depot to manufacturers who make everything we put in our homes. As we've seen, when the housing market suffers so does the whole economy.

PLUS those tax breaks are designed for real estate INVESTORS as well. The government needs people who are willing to build, buy, and manage apartment buildings or else they would have to come up with their own way to house our exploding population!

SJean said...

I really don't agree that it is beneficial to the gov't to subsidize this by 400 billion, or more. Would people really NOT buy houses if the tax breaks weren't there? I think in most cases, people who wanted to buy, would. Do you NEED that break in order to afford your condo? Nah, it's just a neat perk. The tax burden would be shifted, but the average person wouldn't notice a big tax increase.

There would still be profit to be made in rental property, without the tax breaks. My rent is X dollars, I assume it is costing the complex much less than X dollars for my tiny apartment.

BUT, I have a feeling that you and I have quite different political/economic veiws, so I can agree to disagree.

Well-Heeled said...

SJean - that is a really interesting article! In fact, one of the reasons that my mom encourages me to buy as soon as possible is to take advantage of the tax break.

The article made alot of sense - in both that the deduction primarily benefits middle-to-upper-class people and how difficult it would be to repeal.

The short history of how the deducation came about is also fascinating.

Anonymous said...

What does fairness have to do with it?

On the flip side of the coin, in Massachusetts the mortgage interest is not deductible, but renters can deduct up to 50% of up to $6,000 a year in rent - provided they identify who they paid the rent to. My personal opinion is the state does that just to make sure the landlords are paying their taxes properly, because the cash value of the deduction is limited to about $159 per renter.

SJean said...

I wish I would have titled it "Is the mortgage interest deduction good for us?" Us as in, the country as a whole.

$159 is not going to help me much....

Wednesday, February 6, 2008

Is the mortgage interest deduction fair?

While filing my taxes using TaxAct, I clicked on a pop-up that gave me tax tips for 2008. One interesting suggestion that had was to own a home.

A Real Tax Shelter
Purchasing a home is one of the best tax shelters available. The interest and points that you pay for the purchase are deductible as itemized deductions. The property taxes that you pay on the home are also deductible as itemized deductions. Best of all, when you sell the home, you probably will not need to pay any tax at all on the gain. There is no other investment that can provide the tax advantages like home ownership.

Though it was a friendly little tip, it got me thinking and got me a little mad. Why is does owning a home provide such great tax benefits? (Deductions for dependents is another story.... But raising kids is ridiculously expensive so this doesn't bother me much.) Is it fair? If so, why is it fair? Do most developed countries do this? Where did this idea come from? Of course, popular belief is that the main reason is to encourage people to own homes. It is the American Dream. But why? Why does the government want to encourage home ownership for everyone? Why am I seen less favorably because I'm priced out and relatively uninterested in locking myself to a property?

How about another viewpoint? The New York Times says that is simply a nice "American folk legend: the government invented the mortgage-interest deduction to help people buy their own homes, and the level of homeownership has risen ever since." The real story, they claim, is much less middle class friendly. It stems from the government originally having all interest as deductible, which was really intended to help business. The average American didn't have a mortgage (or credit card) and wasn't paying interest in the first place (can you believe that!), so interest was a business expense and therefore deductible. Later this broad rule was changed, for obvious reasons, but the mortgage interest stayed (for less obvious reasons.) Further, the author claims tax is actually regressive with "the rewards are greatly skewed in favor of the moderately to the conspicuously rich." Wow. This is stuff I'd never heard of before. I will stop myself from regurgitating the whole article, but it is a great read!

So, how much of an impact does this really make on me anyway? I assume if you own property, you must itemize deductions. I generally take the standard deduction. What kind of itemized deduction would someone on my salary with property get, assuming my rent is equal to their housing expenses? It would be an interesting exercise. The more expensive the house, the bigger the difference.

Ho much impact does it make on the government? A lot, actually: "The mortgage-interest deduction. We all love the deduction for home-mortgage interest. But renters and those who own their homes free and clear get nothing. Cost to the government: $402.7 billion." That number is from 2006.

If most people are deducting mortgage interest, why can't I deduct anything for my rent? There is interest and taxes built into the price of my apartment. Is someone else taking those deductions for me? Actually, a few states do allow a small tax break for renters, based on the fact that we indirectly are paying someone else's property taxes. In California, it is only for senior citizens with low incomes. Yet you can deduct interest on mortgages values over $1 million.

What can a renter do? This article suggests deducting student loan interest (which saved me a couple hundred this year) or a hybrid car deduction (can't afford a hybrid). For some reason, I don't feel like that evens things out at all. Apparently all I can do is write my congressman or buy a house.

What do you think? And is your view skewed by the fact that you either do or do not own property? Is it possible that eliminating this deduction could actually benefit the majority of people?

9 comments:

Ernesto said...

If you think mortgage interest is unfair, let's hope you never bump across deductions small business owners are allowed.

Imagine you could expense everything you bought, small business people are not far from that. Ever wonder why so many people buy Hummers? There's a write off for vehicles over 6000 pounds. So about everytime you see a Suburban, Lincoln Navagator or Escalade someone took a pre-tax write off (Up to $125,000).
Office expenses, postage, trips to Lowes, mileage, you name it and someone is writing it off on their taxes business related or not.


minimum wage said...

It's not fair, but politics isn't about being fair. Sometimes it's about helping your contributors and supporters, sometimes it's about social engineering, but it's not about being fair.

Homeowners are like a sacred voting bloc, politicians pander to them. That's why homeowners get lower property tax rates than rental property in most states Homeowners cast the vast majority of votes in this country, and politicians know on which side their bread - and vote - is buttered.

In addition to the reasons above, there is actually a very good reason - one grounded in accounting principle - that renters don't get a deduction for rent.

There already exists a deduction for rent, but your landlord enjoys it as a rental business expense on Schedule E.


Frugal Bachelor said...

Awesome post, I agree 100%, and you said it much better than I could. Thanks for the very interesting NY Times link. Your post inspires me to put "link roundup" on my own blog which I will do if I can find some more good posts to include alongside yours.

BTW, I think property taxes are enough punishment in return for deducting mortgage interest. Although they are deductible also ..


SJean said...

True they pay property taxes, but through my rent, I'm sure I'm helping pay some property taxes somewhere along the line.


MEG said...

The tax breaks are beneficial for the government, actually. The incentives in the form of tax breaks keeps people buying homes (and makes it more affordable for people to do so). This raises prices AND increases the number of homes. Both things increase tax revenue in the form of property taxes.

Also, the breaks benefit the economy (which benefits the govn in the form of income taxes and the prosperity of the average American in general). Housing is a huge part of the economy from builders to developers to title companies to banks to lowe's and Home Depot to manufacturers who make everything we put in our homes. As we've seen, when the housing market suffers so does the whole economy.

PLUS those tax breaks are designed for real estate INVESTORS as well. The government needs people who are willing to build, buy, and manage apartment buildings or else they would have to come up with their own way to house our exploding population!


SJean said...

I really don't agree that it is beneficial to the gov't to subsidize this by 400 billion, or more. Would people really NOT buy houses if the tax breaks weren't there? I think in most cases, people who wanted to buy, would. Do you NEED that break in order to afford your condo? Nah, it's just a neat perk. The tax burden would be shifted, but the average person wouldn't notice a big tax increase.

There would still be profit to be made in rental property, without the tax breaks. My rent is X dollars, I assume it is costing the complex much less than X dollars for my tiny apartment.

BUT, I have a feeling that you and I have quite different political/economic veiws, so I can agree to disagree.


Well-Heeled said...

SJean - that is a really interesting article! In fact, one of the reasons that my mom encourages me to buy as soon as possible is to take advantage of the tax break.

The article made alot of sense - in both that the deduction primarily benefits middle-to-upper-class people and how difficult it would be to repeal.

The short history of how the deducation came about is also fascinating.


Anonymous said...

What does fairness have to do with it?

On the flip side of the coin, in Massachusetts the mortgage interest is not deductible, but renters can deduct up to 50% of up to $6,000 a year in rent - provided they identify who they paid the rent to. My personal opinion is the state does that just to make sure the landlords are paying their taxes properly, because the cash value of the deduction is limited to about $159 per renter.


SJean said...

I wish I would have titled it "Is the mortgage interest deduction good for us?" Us as in, the country as a whole.

$159 is not going to help me much....