[gubamyster]

I never figured out why that was a desirable benefit, sounds like a giveaway to the lending lobbyists/mortgage industry. Why wouldn't it be better for you to write off the principle?

First of all, the mortgage interest deduction (and property taxes, which will go away in this proposal) is a huge deduction for most people. It can be the difference in purchasing and not purchasing a home. If you are living in an apartment and paying $2,500 - $3,000 or rent you do not get a write off for the rent. However, if you now change your withholdings from 1 to 9 and take that extra tax money each month towards a mortgage, in anticipation of a huge writeoff, you can now afford to purchase a home for about the same as what you are paying in rent.

The purchase of a house stimulates the economy and creates many jobs. From real estate, bankers, escrow, title, contractors, painters, hardware, all the way to landscapers. It is a big jobs creator and is usually a writeoff for many years. Then, when you refinance, pull money out & do improvements, there is more economic stimulation for several more years.

Secondly, nobody gets a deduction for paying principal of any loans – home, car, business. Likewise, when you get the loan, you don’t have to claim the loan funds as income. It is a fundamental accounting principal. The principal part is merely a balance sheet transaction that does not affect income or expense. The lender reduces Cash & increases Accounts Receivable. Both Balance Sheet transactions. The loan recipient increases Cash and increases Accounts Payable, then simultaneously reduces Cash and increases Assets (the home). Again, all balance sheet transactions. The payback of the loan is just a reversal of this process and again, does not affect revenue & expenses.

The mortgage interest is an expense – the cost of using other people’s money. So when you pay interest, the lender records Income and the payer records an Expense. These are Income Statement transactions and where the revenue & expenses takes place. That is why only the interest portion of a loan is a deduction. The bank records income, the payer records an expense.

Now, the doubling of the By the way, the disallowance of property taxes & state taxes in this proposal is going to be a huge deal, especially here in CA where both are big deductions.

[STARLIT]

FOX Business‏-

Aluminum added to @SecretaryRoss hit list, cites national security.

Aluminum added to @SecretaryRoss hit list, cites national security https://t.co/JgsNDuXQ11— FOX Business (@FoxBusiness) April 27, 2017

Part of the article---Ross noted that there is just one U.S. smelter plant that can produce high-quality aluminum for the defense industry. “It is very, very dangerous to have one [high-quality] supplier of critical material” he noted.

Along with national security concerns, Ross said imports have, in part, crippled the U.S. aluminum industry which has seen at least eight smelter plants either close or dial back production since 2015. The secretary also called out China’s rising dominance of global aluminum market share. Russia and the United Arab Emirates are also big suppliers to the U.S.

[gubamyster]

Sorry, I got distracted 7 hit send to soon:

Now, the doubling of the Standard Deduction will negate some of the mortgage interest writeoff in later years, as the interest will presumably be lower than the Standard Deduction,

[weston]

The new tax plan DOUBLES the standard deduction from 7k to 14k for single. From 14k to 24k for married.

That’s fourteen thousand extra dollars of deductions. That would make up for most middle class people’s property tax and state tax deductions

[Spunky]

"First of all, the mortgage interest deduction (and property taxes, which will go away in this proposal) is a huge deduction for most people."

I would like to know who those people are? We were not able to take a mortgage deduction for years as the STANDARD deduction always came to more then what taking the few deductions would give us. Same with my daughter who only made about $35,000 a year. Single parent with 3 kids. Her standard deduction was more then what the mortgage deduction and interest deduction would give her.

[CottonBall]

All that is true. However as with all government interference, it had unintended consequences. I think being able to deduct interest has increased house prices. It became a catch-22: people could afford more so prices increased then they needed the deduction to afford any house. It also allowed people who couldn’t really afford a home to get one - then caused problems when the interest on the loan lessened as principle was paid down or worse, ARMs reset

[ROCKLOBSTER]

If you are living in an apartment and paying $2,500 - $3,000 or rent you do not get a write off for the rent.

You should be able to.

Secondly, nobody gets a deduction for paying principal of any loans – home, car, business.

Understood, but you should be able to deduct the principle or the cash investment of a home.

The mortgage interest is an expense – the cost of using other people’s money. So when you pay interest, the lender records Income and the payer records an Expense. These are Income Statement transactions and where the revenue & expenses takes place. That is why only the interest portion of a loan is a deduction. The bank records income, the payer records an expense.

Granted, which is exactly why I said it's a huge giveaway to the lending industry...people are being encouraged to go into massive debt and "writing off the interest"...thinking it's some great benefit.

That does nothing to put money back in the consumer's pocketbook in either the short or the long term.