Posted on 04/18/2022 11:12:24 AM PDT by AndyTheBear
The Supreme Court Monday rejected an appeal from several states challenging Congress's cap on state and local taxes that can be deducted from federal taxable income.
(Excerpt) Read more at foxnews.com ...
I think there is a workaround for this using an S corporation.
It was taking a while to sink in. I love it.
Shhhhush.....Be quiet.
I thought lefties were all about people paying “their fair share”. I live in CA. The SALT deduction would be nice but not to the point where the rest of the country has to obfuscate how predatory CA taxes are.
EFF Newsom and Sacramento!
Decided the right way for the wrong reason.
Florida and Texas incoming !!!
I live in a Blue State and feel exactly the same way.
Use an S corporation to get the full deductibility of personal expenses is a major risk that opens a huge can of worms. The first problem you have is that the expense for an S corporation can only be used to offset income that is derived through the operation of the same entity. Suppose you own your home in a high-tax state and pay $25,000 in state and local taxes. What kind of S Corp. do you set up to get the full $25,000 deduction instead of the capped $10,000?
Yes, 25 States have enacted a Pass Through Entity (PTE) Tax for Partnerships and S Corporations, and the IRS has agreed that it can be taken as a Federal deduction on the entity tax return, with Proposed Regulations coming....at some point
They decided not to take up the case so didn’t really decide at all.
Yep. Any profit will flow through and is taxable.
Don’t think so. This was a great move under the Trump years, where they capped the federal deductions for local and state taxes... so the Fed stopped subsidizing high tax states.
Before if a state had a high tax rate on income, property etc... The fed just let you deduct it unlimited... now its capped. If you live in a high tax state, the fed maxes out what you can deduct of your paid state tax...
I believe they also lowered the interest deduction on mortgages, though it is still to high.. it is insane that anyone can deduct 375k of mortgage interest from your taxes, 750k if you are a couple. Before it was 500k per person and 1 MM per couple...
It is insane that the fed is subsidizing the banking industry with this... If you want to deduct mortgage interest to help encourage home buying for lower income folks, that’s one thing, but if you are paying 350k in interest on your mortgage a year, let alone 750k.. you are certainly not someone who needs subsidization to own a home.
Post retirement, I expect my state income taxes will be well under the $10k cap, so the property taxes can resume being a federal deductible element and the net rental income becomes actual income instead of offsetting property tax.
There is a proposal to eliminate property taxes for "seniors", but the income is offset by increasing sales tax on everyone AND the property tax exclusion doesn't remove levies for local school districts that comprise the lion's share of the tax bill.
One of the many problems with the SALT cap is that it is NOT indexed for inflation.
Standard deduction bumps up but SALT stagnates.
I think the young lady’s tears are insincere.
It is insane that the fed is subsidizing the banking industry with this... If you want to deduct mortgage interest to help encourage home buying for lower income folks, that’s one thing, but if you are paying 350k in interest on your mortgage a year, let alone 750k.. you are certainly not someone who needs subsidization to own a home.
It is not insane at all. The deduction is intended to prevent us from becoming a nation of renters.
If I own a rental house, the mortgage interest is a business expense and is 100% deductible. If I own 10 rental houses, mortgage interest on all of them is still 100% deductible. This means that for many people it is less costly to rent than to own. Even though I make a profit on the rental, the mortgage interest being deductible moves the costs low enough that I can rent the house to someone for less than they will pay in a mortgage.
Home owners have a lot more skin in the game than renters, and the mortgage interest deduction was intended to level the playing field.
Ahhhhhhhhhhhhh..........NO!
Lefties are all about paying for their programs and their debts with other peoples money!
“Suppose you own your home in a high-tax state and pay $25,000 in state and local taxes. What kind of S Corp. do you set up to get the full $25,000 deduction instead of the capped $10,000?”
Put it in a Family Trust first, to keep it away from any undesirable in-laws.
Then let the lwayer earn their money.
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