The Mortgage Deduction, Are You FU$KING Serious?

[lifesbeautifulmagic]

ok, I have only been on DU a few minutes today, so haven't found any real information, but I read at another source that the 6 Gangsters are suggesting that we reduce SS benefits, lower corp tax rates, and ELIMINATE THE MORTGAGE DEDUCTION? Are you freaking kidding me?

Do these people have any idea how important that deduction is to average families? - The families under less stress vacation on that deduction, those under more use it for auto repairs and to pay down credit card debt, among other things.

Between any dem, or any politician really, that votes to reduce social security benefits AND eliminate the mortgage deduction is so going to get thrown out on their asses next election time. Deservedly so, too.

Someone tell me this isn't true, because I just can't believe the gang o' 6 could be that heartless and stupid.

[pnwmom]

1. I heard that they were thinking of capping it at $500 K and/or

eliminating it for 2nd houses.

[jtown1123]

If it's the same as Bowles Simpson, here's some info on it

http://www.nytimes.com/2010/11/13/business/economy/13mortgage.html

[unblock]

15. you mean "they're not planning on eliminating it all at once".

[FourScore]

16. The only reason we have our second house is because the housing market crashed and we couldn't sell.

Getting rid of it for 2nd homes will hurt ALOT of people.

[jtown1123]

22. Yes. A lot of middle class folks. Read the fine Print

[WatsonT]

56. But that will kill all those poor people with million dollar houses and vacation homes!

The desperately poor in this country count on that deduction and . . . uh . . wait a sec. .

[Codeine]

2. There's nothing about homeowners that should qualify them

for a special subsidy that those who rent are unable to access.

[Lance_Boyle]

7. renters access it

If rental property owners didn't get the deduction, rent would increase by the amount the deduction used to save the property owner.

[Codeine]

8. Trickle-down mortgage deduction?

:eyes:

[Lance_Boyle]

10. If that phrasing floats yer boat, go for it.

But don't be surprised when rent goes up if the property owner loses that deduction. :shrug:

[femrap]

30. It's NOT the owner's

residence so this might be a totally different tax schedule. He's running a 'business' of renting to tenants.

[slackmaster]

12. Shit trickles down too, so of the deduction for mortgage interest on rentals was eliminated...

...rents would go up accordingly.

[former9thward]

40. Not true. There is competition to get renters.

Renters can go elsewhere. One reason it is good to rent. Renters should not have to subsidize homeowners through their income tax. Let homeowners pay their own taxes.

[shireen]

54. location location location

my neighborhood, a nice family-oriented area with good schools, and a college nearby, is the ideal place to live for families with young children and college kids. So the apartments i live in are able to charge high prices and always get tenants. I don't know how long i can continue living here -- i love this neighborhood and lived here 23 years, and i'd have to leave this area if rents get higher.

[cyberpj]

79. Not true. Rents where I live have been increasing - landlords know it's harder to get mortgages so

they, of course, are taking advantage of the increase in people who MUST rent now.

[tjwash]

83. Raising rents actually can hurt the landlord believe it or not.

You have to claim rent collected as income. The tax deductions from the interest offset that. The more you collect in rent without an offset, the more in taxes you pay, especially if you get bumped up to a higher bracket.

[MgtPA]

18. Yes, absolutely.

[FourScore]

19. YEP! n/t

[lumberjack_jeff]

23. Homeownership becomes less attractive, more demand for rentals.

High demand for rentals = "The rent is too damn high!"

[taught_me_patience]

32. Home owner ship becomes less attractive means lower prices

not necessarily more demand for rentals. False conclusion there.

[lumberjack_jeff]

21. Rentals are a different kettle of fish.

Rental Interest is deductible as a business expense and always will be.

[jberryhill]

27. Rental owners don't get the home mortgage interest deduction

Their interest on loans is ordinary business expense.

False premise.

[taught_me_patience]

29. Not true

Rent is a function of supply and demand. It is not a "cost plus" calculation. You're argument is the same bull-shit supply-side theory that's been debunked many times.

[AngryAmish]

75. You assume that there is a perfect market for rentals

If there is a definition of an inefficient market it is rental property.

[eallen]

31. If rental owners use the deduction, they're doing so illegally

The deduction isn't available to rent property. It was intended to subsidize home ownership.

I agree with the previous comment, that it doesn't help people who can't afford to buy a home. And it may hurt those who can barely can afford to buy a home, by serving as one more lure into a precarious position that they would be wiser to avoid. In case you've missed the last few years, people are learning that a home is not always a good investment, and at times can become a financial anchor that prevents you from seeking better harbors.

:hippie:

[lumberjack_jeff]

35. Interest is a deductible business expense to landlords.

It has nothing to do with the mortgage interest deduction being discussed.

[slackmaster]

48. You can deduct mortgage interest on a rental from income on that rental

It's true that landlords can't deduct that interest from earned income, but they can and do deduct it from rental income.

[slackmaster]

9. Social engineering

The idea is to make it easier for people to own their homes.

[WatsonT]

58. Which is in itself a terrible idea

I get the appeal but it really makes more sense to have more people rent than own.

A rented home can be abandoned when the local economy crashes. A owned home cannot.

Likewise giving everyone a half acre lot and twice as many bedrooms as they need is driving up the price of land and using unnecessary amounts of energy.

We ought to be moving back to the old way of living: most people in cities proper, with everything else as wilderness or farms/fields.

[slackmaster]

68. To me, having a large portion of the population renting looks too much like feudalism

I do enjoy being King Turd of my own Shit Hill.

[WatsonT]

74. Everyone rents

Either you pay money to a landlord or face eviction, or to a bank or face eviction, or to the government or face eviction.

There is no way you can legally own a home in this country that you can't have it taken away from you for failure to pay money to some party. To me that's renting.

/possibly on Indian reservations, I'm not sure how their laws work. But excepting them: try not to pay your property taxes on your house and see how much you own it.

//and serfs couldn't really move around or come up with their own contracts. They were tied to the land, unable to move no matter what the conditions there. Much like owning a home in a depressed housing market.

///and if you think you're secure in your house just let a cop "smell" marijuana near it.

[locahungaria]

77. True that. n/t

[slackmaster]

80. My house will be paid off in no more than 6 years, 11 months

Then I get to keep paying property tax.

The situation isn't perfect, but it beats the hell out of having an asshole landlord.

[aquamarina]

26. Bad idea

Renters are not responsible for a whole host of costs that homeowners are -
property taxes
property repairs
interest on home loans
homeowner association dues
special assessments
I could go on...

Take these away and the entire housing market would collapse - taking rental properties with it.

If you want to take away the mortgage decution then fine - watch your rent go up accordingly.

I really can't believe we are going to war against each other over these deductions. This is a red herring.

[bowens43]

33. There certainly is.

[indurancevile]

45. The net effect would be to reduce the percentage of homeowners & concentrate housing ownership into

fewer hands -- a smaller class of rentiers -- in the same way other "businesses" have been concentrated. I can forsee the day when a lot of housing is owned by national/global corporations, in fact, & home ownership is out of the question for most of the population.

[rufus dog]

71. as a homeowner who has taken over 200k in deductions I have to tell you...

that you are correct.

[no_hypocrisy]

3. Don't forget elimination of property tax deduction.

Here in NJ, that's like taking away at least $15,000 in the little towns.

[FourScore]

13. HOLY SHIT!! Are you serious?

Eliminating these 2 things could really hurt us.

[lumberjack_jeff]

17. Unlike mortgage interest, local taxes definitely should be deductible. n/t

[indurancevile]

46. depends on whose ox is gored, does it?

[lumberjack_jeff]

65. No. You can't avoid taxes.

The issues are fundamentally different.

[indurancevile]

70. actually, some people can.

and i don't believe the issues are so different.

[Atman]

4. Well, it will help the housing market...oops, maybe not.

This is sooo transparent. With a gazillion foreclosed-upon houses on the market, America is fast becoming a nation of renters. The "dream" of owning a home is long gone for many. The wealthy, who won't have to pay taxes anyway, will own all the homes we live in. I'm sure there is some other loophole in there somewhere which will enable THEM to deduct our rent payments as some sort of "capital gain" or something.

.

[bluestateguy]

5. I don't consider it a priority

We have been pushing too many people into home ownership who were not ready for it over the last 20 years, leading to the mortgage meltdown.

Besides, no such deduction is there for renters.

[jtown1123]

6. Reduce it as well as child care tax credits, charitable donations, 401 (k)s etc.

[bowens43]

34. why?

there is no need.

[jtown1123]

11. Details are still vague but since this is based off of Bowles Simpson that is highly likely

[lumberjack_jeff]

14. The very high standard deduction makes it moot for most taxpayers.

Only about 35% of taxpayers itemize.

[sammytko]

57. Thank You! You are right

[WatsonT]

59. This is what I've been saying on other threads

but still it's presented as "tax cuts for the wealthy, tax increases for the poor".

Yes, this will devastate all those poor people who own multiple million dollar homes.

Next up: new yacht and caviar taxes that will disproportionately hit the indigent.

[The Big Vetolski]

20. Believe it. Just one more step on the road to neo-feudalism. This is

not about the money. It's about power. They want to grind us down until we grovel at their feet for a few crumbs with which to feed our kids. They despise us. We're just a pack of losers at best or a herd of cattle at worst to them.

[femrap]

36. These wealthy

elites....TPTB...have anything and everything they could possibly want materialistically. You're right...it's about CONTROL. They love to push an emotional button and watch the Sheeple run around. The organized religions are very good at that.

This 'default crisis' is going to be used to kick the working people of the US in the arse. And TPTB will end up with lower tax rates. That's why Wall Street has been so complacent lately. It'll all work out for them.

Pretty soon, the little serfs will be getting pitchforks!

[deutsey]

38. It goes a long way back

Ancient Greece (oligarchy vs. democracy) and ancient Rome (optimares vs. populares) had their struggles between the wealthy elites and the common people (or, as the wealthy elites called them: the "herd" and the "rabble").

For a while there, the trend has slowly tilted toward the common person since the Dark Ages. Lately, it looks like the trend is tilting to the other side again, although not all that slowly.

[kenny blankenship]

24. Rich people got all the houses they need now. Your foreclosures have meant they can scoop it all up.

They can distribute homes to their offspring from now til Doomsday. Their kids weren't going to need that deduction, and now it can go away.

[femrap]

25. It probably will be

reduced instead of eliminated. But we certainly can't have a good 'Default Crisis' without f*cking the working people. Plus I read they want to reduce/eliminate the tax deduction for Retirement Accts.

The one 'change' I don't mind is that there will be a limit on how many 'family deductions' can be taken. I'm really not for 'litters of children'....of course the Mormons will be pissed about this.

The Real Estate Lobbyists will be incensed over the interest deduction.

I think this has all been planned....I've been watching Wall Street and wondered why they are so complacent these days....facing 'default' after all.

It's all part of the plan to give us SERFING USA!

Look at the 6 gangsters....Warren DINO, Durbin (maybe he's just given up), Conrad (DINO)....and Coburn from OK....he's nuttier than a pecan pie.

[Silent3]

28. I'd support a cap on that deduction, even if the cap was lower...

...than what I currently get to deduct right now. That way the deduction would help support home ownership for the poor and middle class without subsidizing luxury housing.

[MineralMan]

37. It's pretty important to note that there is no bill. This is all

blue sky stuff. None of this is finalized, and much will be changed. Of course, Congress will have to tack on a lot of pork bills, some restrictions on abortion, and a bunch of other extraneous stuff, so this is a long way from implementation.

[jtown1123]

42. So we shouldn't speak about about the things we detest? Which is pretty much all of it?

[Bragi]

76. Loyalists can object AFTER the Bill becomes law

Any griping before that would weaken the negotiating power of the President.

[hfojvt]

39. both the mortgage and property tax deductions should be scrapped

they are huge tax breaks, mostly for rich people, as I detail here http://journals.democraticunderground.com/hfojvt/151

But they should then be replaced by things which will help the middle class - like a higher standard deduction and the refundable making work pay credit.

Not by even more tax breaks and tax incentives for the rich.

[damntexdem]

41. Oh, sure, they're aware of the importance to AVERAGE families.

But those are not the families they're worried about.

[defendandprotect]

43. k

[Recursion]

44. I'm tired of subsidizing homeowners

Why should your mortgage get a tax break when my rent (which is probably higher than your mortgage) doesn't?

[indurancevile]

47. i'm tired of subsidizing rockefellers, mellons & morgans.

i'm also tired of the small minded crap like "why should those union guys get health benefits when I don't? why should homeowners get a deduction when I don't?"

[Recursion]

49. Many of whom have mortgages (nt)

[indurancevile]

51. yes, but their mortgage deductions aren't what's making them rich.

but go ahead, attack the nobodies.

[Tierra_y_Libertad]

50. How about the subsidies for parents?

Or, the subsidies for educating the results of their life-style choice?

[WatsonT]

60. Aren't those being cut too?

(well, proposed at this point)

[LiberalEsto]

55. So let's all subsidize corporate jet deductions?

This is the usual plan to pit one group (homeowners) against another (renters.

While we waste time squabbling about crumbs, the rich are wallowing in deductions for corporate jets and all kinds of other huge deductions that we would never get in a million years.

I get really, really pissed when I see mega-corporations GETTING MONEY BACK from our pockets instead of paying corporate taxes.

Elimination some of the fat-cat deductions would put far more money in the US Treasury than killing the homeowner deduction. I would, however, eliminate deductions for all second and third homes and homes above $500,000 or so.

[WatsonT]

61. False dichotomy.

http://en.wikipedia.org/wiki/False_dichotomy

[Dawgs]

78. This phony war between renters and buyers is bullshit.

Quit making homeowners out to be the rich; which almost all are not. The mortgage deduction is needed to keep many (the middle class) from paying thousands extra each year in taxes - which most can't afford.

Renting sucks, but there is also no risk put on it. Homeowners and landlords have to deal with maintenance and up keep, on top of mortgage and taxes. They have to deal with renting to people that don't pay and also damage their property. Those expenses equal a lot more than the rent they receive.

Homeowners are taking an expensive risk. Renters are not. Neither is doing anything wrong.

[n2doc]

52. This, along with allowing robo-signing, should finally kill what is left of the housing market

Which seems to be on the agenda for these folks. I see a number of folks here at DU are hoping for a sudden influx of dirt cheap houses. Sorry, those will be sold to Chinese and European investors, not you, and put into the rental pool. And you can forget about getting an inheritance from your parents, their house won't be worth squat and they will likely have to take a reverse mortgage on it in order to pay their medical bills.


I do think that this is going to really, really piss off what is left of the middle class. To the point where they will abandon support of either party and be looking for a third party. Hitting people in their pocketbooks, when they have few to no good choices in getting out of it, is a sure fire way to get their attention.

[LiberalEsto]

53. Without that deduction, we'd be screwed

There is no possible way my husband and could pay the extra income taxes if the mortgage interest deduction were eliminated.

Unless we gave up little luxuries like food, health care and utilities, lived in a cold dark house and gnawed on sticks.

This is not "shared sacrifice." It is "sacrifice those who aren't wealthy."

[lifesbeautifulmagic]

66. I'm with you - it would hurt if we had to

give up the deduction.

[MrsBrady]

62. the standard deduction is all we can take,

we don't have enough else to write off to be able to use it.

[Kaleva]

63. Eliminate the deduction on 2nd homes and put a cap on the deduction for primary homes.

I see no reason why those who can afford a vacation home, condo or time share cannot pay extra tax. I also see no problem who those who can afford McMansions in paying more tax.

[SheilaT]

64. When I bought my little home

two years ago, the guy who does my income taxes explained very carefully to me that given my particular income, the mortgage deduction would only be good for about five years for me, and at that point I would not have enough deductions to itemize.

The truly bad thing about the mortgage interest deduction is that it encourages people to buy more expensive homes than they otherwise might. And people were surprised at the housing bubble. I recall reading back in the mid-70's some very good arguments as to why the mortgage interest deduction ought to be phased out.

I'm old enough to remember when the interest we paid on our various charge accounts were also deductible, if you were itemizing. The world did not come to an end when that ended, despite many predictions that it would.

[Nye Bevan]

67. Also, the mortgage deduction was abolished *years* ago in the UK.

The world didn't end there, either.

[slackmaster]

69. I had a car loan in 1986 when the deduction for consumer loan interest was phased out

I believe it was phased out over three years, but it really affected my budget.

[Warren DeMontague]

72. If it came along with a much HIGHER top marginal rate, a 30-50% cut to defense spending

the end of the drug war, legalization and taxation of marijuana, and after crunching all those numbers the significant surplus $ was used not ONLY to strengthen (not cut) SS and Medicare but to fund a REAL Single Payer Health Care system, then I would be fine with something like an end to the mortgage deduction.

But, really, what it's about is cutting the taxes on Billionaires down to something like 23%. It's fucking ludicrous. How can we be talking about TAX CUTS now? It's totally fucking insane.

[quaker bill]

73. I can never use it anyway

Since I refinanced to a lower rate, my mortgage interest and other deductibles do not meet the standard deduction. So for me, itemizing makes no financial sense. If I had a 500K house it would work, but there would be that problem with making the payments....

[tjwash]

81. I'm 99% sure that is in there to remove later under the guise of "negotiation," HOWEVER...

...the sheer and utter stupidity exhibited by both sides of the aisle on this whole matter, leaves just enough uncertainty about that to make one extremely nervous.

If they are actually stupid enough to even try and eliminate the mortgage tax deduction, that would actually be more devastating than just not raising the debt ceiling and letting the US default on its debts. The housing market has not even began to recover yet. In California, they are just happy that at the moment, the pace of defaults has started to slow down. There would be such a flood of properties hitting the market around the country at once, that housing prices would drop to 3rd world country levels, and cause a massive snowballing effect of underwater mortgages and foreclosures.

Of course the dipshits in DC are aware of this....right....RIGHT??

[tammywammy]

82. I just cannot manage enough outrage for removing the mortgage interest deduction for 2nd houses.

BTW, when I purchased my house I never took into consideration the interest deduction, I didn't buy more house than I could afford.