The Tax Bill: Placing a Dagger in the American Dream of Home Ownership

Huffington Post ^ | 11 Nov 17 | Miles Zaremski

[trebb]

You totally missed the "" around my use of the word and then went with that to miss my actual intent - my point was that we have become so accustomed to the scraps the government "gives" us that even while we claim to be constitutional conservatives, we will resist anything that threatens to take away some of them scraps if we are the ones "missing out"...We will never achieve constitutional governance as long as these "tax breaks" and other"incentives" stay in place. But, alas, so many have become so accustomed to them that they will resist a return to true constitutional government.

I know I piss a lot of folks off here, but don't let that cloud your thought process.

[RummyChick]

I am asking you for the logic that it should stay in place . You are carping on people expecting handouts . What about the people who are being gutted just because they dont sit around on the dole.

Nursing home expense can be $100k a year and that is a shared room private pay in a mediocre facility. Why shouldn’t that expense be deducted

[Ambrosia]

Let us be honest, the average (median) property tax in NJ is $6579. per year. Cumberland County as lowest averages around $3744.? The highest county property tax County median is $8523., so over $10,000 yearly is incorrect...some not many.

Inflating the truth does not help your argument. Anything over $10000. in taxes yearly would represent the elite, wealthy citizens. Not middle class, etc.

And considering that NJ is the highest of property taxes, it would impact far less than you claim.

So if someone is paying $20,000 a year in home property taxes, then they are wealthy, upper class!

http://www.tax-rates.org/new_jersey/property-tax

[Mariner]

“I have strong memories about the changes brought on by Reagan’s 1986 act. “

Just how did Reagan’s plan affect the Real Estate market...in any negative way?

What real estate deduction were available then that are not available now?

[Ambrosia]

Here is the NJ reality in 2017 research:

http://www.tax-rates.org/new_jersey/property-tax

Anyone over $8000. is NOT middle class, as only one county has such high taxes. The average is much lower, and in Cumberland County, NC 2017 taxes average were $3744.

So if you can deduct up to $10,000 in yearly taxes, there are only upper class homes affected....and only by amount above the ten thousand.

[brianr10]

Here is what they do in Canada:
Canadian federal income tax does not allow a deduction from taxable income for interest on loans secured by the taxpayer’s personal residence, but homes used in businesses as a landlord who owns a rental residential property can deduct interest as any other reasonable business expense. The difference being the deduction is allowed only when the property is not used for the taxpayer’s personal use but is used as in any other type of business.[2] However, there may be additional exclusions for passive activity losses.
An indirect method, known as the Smith Manoeuvre, for making interest on mortgage for personal residence tax deductible in Canada is through an asset swap, whereby the homebuyer sells his existing investments, purchases a house in full or in part by the sale, gets a mortgage on the house, and finally, buys back his investments with the money from the mortgage.[3] The Supreme Court of Canada has ruled in 2001 in the Singleton v. Canada case[4] that transactions in the asset swap are to be regarded as distinct, thus rendering the interest on home mortgage acquired as part of the asset swap tax deductible.
The home ownership rate in Canada was about the same as in the United States in 2008[5] despite the difference in tax policy.

So you need other assets equal to the cost of a house in order to get the deduction.

[brianr10]

Exactly. I bought a cheap house and maxed out my retirement savings. Can’t eat drywall.

[kearnyirish2]

Why would you be furious? You’d be pulling in $80K+ for 180 six-hour days of work, with guaranteed employment for life and no performance metrics.

[Mariner]

“You seem to be whining about getting weaned off the government teat”

It appears that for the Social Justice Warriors on Free Republic, when government takes less of your money at the barrel of a gun, they call it weaning.

After all, it was the governments money anyway, right?

[brianr10]

Strike the last sentence in the previous post.

[oldbill]

Thanks for the reality check.

The beneficiaries of most of these current tax breaks (mortgage interest, state and local taxes, education expenses) are mostly the rich, who live in McMansions in high tax blue states where thy send their kids to Ivy League colleges.

If Middle Class taxpayers in their humble homes and kids in state colleges actually looked at how little they benefit from these deductions, or realized that most claim a standard deduction rather than itemize, there wouldn’t be this wailing about losing their deductions.

And yes, like subsidies do drive up the price of big ticket items like college tuition and home prices, and hide the spendthrift policies of high SALT states like New York and California.

And the rich don’t pay income taxes. They hide their income in dividends, stock options, corporation tax rules, overseas investments, phony loans. Yet they get all these deductions weighted in their benefit.

Wait till Joe the Plumber finds out that his federal taxes pay one third of the housing costs of Warren Buffet and Hillary Clinton.

[Mariner]

” we will resist anything that threatens to take away some of them scraps if we are the ones “missing out”...We will never achieve constitutional governance as long as these “tax breaks”

Are you speaking of the charitable deduction? Or, the increased standard deduction for married couples vs single?

[Mariner]

NJ averages 2% of assessed value per year.

A $500,000 home would hit that $10,000 per year cap.

That is NOT “upper class” in NJ. Or anywhere on either coast.

That’s a middle class home.

[sphinx]

I have strong memories about the changes brought on by Reagan’s 1986 act. It initially devastated the investment real estate market and hurt countless investor’s by eliminating deductions that they were counting on.

As I recall it, retroactive elimination of some classes of deductions was a big part of the problem. I don't recall why that was done, but retroactivity is nasty. Changes should be phased in prospectively. That said, I agree with you that people should not be making investment decisions, including home purchases, based on tax gimmicks that are mostly illusory to begin with. Thinking that you are qualifying for more house because of the deductions ... but not realizing that you are paying a lot more up front ... is a suckers' game.

[Mariner]

“The beneficiaries of most of these current tax breaks (mortgage interest, state and local taxes, education expenses) are mostly the rich, who live in McMansions in high tax blue states where thy send their kids to Ivy League colleges.”

Those are the words of a Social Justice Warrior, not the words or sentiments of a conservative.

I guess it’s all how you define “rich”. I guess we have that dumbed down to a married couple grossing $125k on two jobs, with a home in the suburbs of any metropolitan area of the US.

They will get hammered by this tax plan. And you’ll be cheering it.

[oldbill]

“That is NOT “upper class” in NJ. Or anywhere on either coast.”

Then stop voting for democrats.

[Mariner]

“Then stop voting for democrats.”

It’s the Congressional Republicans that are raising my taxes. I guess those are the folks I should stop voting for.

[oldbill]

“I guess it’s all how you define “rich”. I guess we have that dumbed down to a married couple grossing $125k on two jobs, with a home in the suburbs of any metropolitan area of the US.

They will get hammered by this tax plan. And you’ll be cheering it.”

1. Actually, they won’t get “hammered”. Work out the numbers rather than mouth the democrats’ position papers. For most in that bracket, the changes are miniscule.

2. $125,000 is a damn good income. You don’t seem to know what most of the people in this country actually live on.

3. You are no different than these social justice warriors, most of whom themselves are very rich, who think it is my job to pay your taxes or pay for your nice house in the suburbs.

[oldbill]

““Then stop voting for democrats.”

It’s the Congressional Republicans that are raising my taxes. I guess those are the folks I should stop voting for”

I stand corrected.
You are absolutely correct.
It is Congressional Republicans AND democrats raising your taxes.

BUT, at your New Jersey state level, that is the work almost exclusively of democrats, which you (the majority of New Jersey) always vote for. Congressional Republicans have nothing to do with your 2% real estate taxes, and I don’t want to help you pay for teachers’ retirements that pay more than I make.

[sphinx]

Spoken like Central Planner.

You confuse me. Why do you think that artificially inflating home prices via tax subsidies is (a) good for homeownership rates and (b) anything other than a subsidy for the middlemen who operate on percentages and therefore benefit from a higher cost structure?

For the individual buyer, eliminating the tax subsidies will reduce the cost paid upfront. What's not to like about that?

The people who have reason for concern will be existing owners of expensive homes in high tax states. Repeal of the tax subsidies threatens existing home equity because it would remove two props that currently support artificial overvaluation. Grandfathering the deductions for existing owners will help somewhat. But I agree that the transition issues are real. If we are not willing to face up to transitional issues, however, we might as well forget about tax reform entirely.

It is amazing how many freepers turn out to be swamp creatures themselves when their pet subsidy goes up for debate. I sometimes think the easiest path to real tax reform might be the most radical: complete elimination of the current individual and corporate income taxes replaced by a flat tax (with a high zero bracket amount) or a national sales tax or a consumed income tax. Go big. Change the terms of the debate. I recall some years back someone proposing a very simple transitional plan; allow people to file their taxes under the old system rather than the new one if they preferred, at least for a couple of years. Works for me. I'd be happy to be indulgent in the transitional period if we ended up at the right place in the end.