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deduction may face changes
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Long-treasured mortgage interest
deduction may face changes

Los Angeles Times, by Jim Puzzanghera

Original Article

Posted By:earlybird, 12/10/2012 4:59:50 PM

WASHINGTON — At 70, Frank White isn´t a typical first-time home buyer. But a key reason he ditched his Altadena apartment and bought a three-bedroom house in nearby Pasadena has been common for decades: He wanted the tax break. "I pay very high taxes, and I have no deductions," said White, who owns an apartment rental business with his two brothers. Now, after purchasing the $500,000 home in November, he´s looking forward to writing off the interest on his 30-year mortgage.

Comments:
Maybe not.


      


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Reply 1 - Posted by: thethirdruffian, 12/10/2012 5:12:48 PM     (No. 9058363)

Doubtful.

The highest mortgage balances are in deep blue states and areas --- CA, NY, etc.

Too politically costly for the Dhims.

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Reply 2 - Posted by: jeffreyabigail, 12/10/2012 5:18:39 PM     (No. 9058378)

This is Exhibit A what is wrong with the tax code - struggling renters subsidizing $1,000,000 mortgages in The Hamptons.

People don´t buy houses for a mortgage deduction. They buy a house because they want a house, and then take the deduction. Getting rid of it will lower property values in The Hamptons by 5%. Big deal.

Canada, with no mortgage interest deduction, has the same rate of home ownership as the US.

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Reply 3 - Posted by: veritas, 12/10/2012 5:19:05 PM     (No. 9058381)

From what I´ve read, Canada has stiff downpayment minimums and no interest deduction, but about the same home ownership rate as the US does. So maybe the assumptions of the market-interventionists are wrong? Maybe other factors matter, maybe in some ways more than the numbers do?

Things like equal treatment in the mortgage market? Like predictability in the laws? Stability in the laws? Less social-engineering in the laws?

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Reply 4 - Posted by: DocH, 12/10/2012 5:21:44 PM     (No. 9058387)

It´s certainly wrong to subsidize the purchase of second homes. Why, the people who build them can certain collect unemployment like everyone else.

And that people making over 100K account for three-fourths of the deductions? You know who makes more than 100K? Two teachers, a cop and a nurse, a small-business owner who supports five or 10 workers. Yeah, punish those plutocrats!

In truth, there are worse deductions. It makes the most sense to remove them all and institute a flat tax, as a poster noted. But that takes away the power of pols to deal with people who want their own special breaks. It´s a racket, and we´re paying for it.

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Reply 5 - Posted by: dr.lakerman, 12/10/2012 5:22:49 PM     (No. 9058391)

Economists have a word to describe unintended consequences - externalities.
One of the externalities of the Reagan tax reform was to push people into second mortgages, lines of credit or remortages to keep the tax deduction for the purchase of a car, boat, etc. That put alot of people in jeopardy because housing prices were inflated by generous appraisals so that banks could lend the money.
Now, if president zero and the democrats in congress change the IRS rules, there will be a loss of balance, also called stasis, in the economy. It would be a stupid move. But I do call him President Zero for a reason. He is the dumbest man in the room.

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Reply 6 - Posted by: fleetusa, 12/10/2012 5:25:25 PM     (No. 9058394)

The guy in LA was hoping to be grandfathered but the mortgage interest deduction is one of the biggest ponzi schemes. The real estate and banking community push this which only increases their income and not the homeowner.

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Reply 7 - Posted by: BigGeorgeTX, 12/10/2012 5:30:16 PM     (No. 9058400)

Who gives a 70 year mortgage to a 70 year old man?

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Reply 8 - Posted by: Landshark, 12/10/2012 5:49:01 PM     (No. 9058432)

I hope they kill it.

The majority of the break goes to people in blue areas.

This might be one of those "teachable moments".


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Reply 9 - Posted by: Lurker2, 12/10/2012 5:59:03 PM     (No. 9058448)

There´s no fool like an old fool.

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Reply 10 - Posted by: Passion, 12/10/2012 6:12:50 PM     (No. 9058471)

You can make an argument for and against the mortgage deduction, but changing it now would tank home values like we´ve never seen. That would really hurt folks who own their homes free and clear the most. Their asset value would be cut in half probably, overnight. Others would just walk away from their mortgages. So to all those L.dotters cheering for this to go away, don´t be upset when your equity is halved.



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Reply 11 - Posted by: octrojan, 12/10/2012 6:26:32 PM     (No. 9058491)

It doesn´t only affect expensive homes. If, say, a $1M home is now worth $800K, then an $800K home is worth $600K, and so on down the house food chain. This hurts the value of every home.

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Reply 12 - Posted by: 2dogs, 12/10/2012 6:30:18 PM     (No. 9058499)

For those of us with good incomes, this is the ONLY tax deduction left. We will be really screwed up because we have what you people assume is a "2nd" home, but it really just a tired old lake cottage. It still has a mortgage, has already lost a third of its value, and we planned our finances with the deduction in mind. So losing our equity I 2 homes by a third AND the deduction would suck! You are not necessarily "rich " if you have a second home. Like us, you may now be poor!

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Reply 13 - Posted by: MsMontana, 12/10/2012 6:41:55 PM     (No. 9058516)

Why do we let these dimwits control this conversation?

This is not something that "COSTS" the government. It SAVES money for the government because people who own their own homes and have assets are less dependent on welfare and government handouts. Homeowners make more responsible citizens and are active in the communities where they live. Sure, there are wealthy who also take advantage of the break, but who cares? We regular people outnumber the "rich" in droves.

They are after all of us, they just use the buzzword "rich" to get everyone worked up in a frenzy and to make us forgetful.

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Reply 14 - Posted by: oh-heck, 12/10/2012 7:01:26 PM     (No. 9058532)

Better to go over the cliff and all pay the Clinton rates than to give Dems a chance to pick and choose elements of the tax code to extract more revenue. Stop all of Obama´s Earned Income Credits and raising taxes will become a lot less popular.

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Reply 15 - Posted by: Jubilationtcornpone, 12/10/2012 8:10:17 PM     (No. 9058602)

Who gives a 70-year mortgage to a 70-year-old man? Any mortgage company that doesn´t want to be sued for ageism.

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Reply 16 - Posted by: earlybird, 12/10/2012 8:21:33 PM     (No. 9058609)

The mortgage is on the property, not the person. Assuming the home buyer is creditworthy, there are no assurances in the mortgage business that any borrower will live for a year or five or ten. The loan will remain as a lien against his property regardless of where he is.

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Reply 17 - Posted by: KTWO, 12/10/2012 8:41:35 PM     (No. 9058624)

The deduction should be phased out gradually. Reduce it 10% a year, or even 5%.

There would be no big jolt to those with mortgages now or even to new buyers. Yet eventually the tax code is simplified.



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Reply 18 - Posted by: thewarden, 12/10/2012 8:56:48 PM     (No. 9058638)

Everyone I know will lose their homes. We are not rich and we have bought what we could afford. We´d be screwed. It is the only way the average person can own and I cannot believe some of you think this would be a good idea. Thanks for nothing. A little unfair to change the rules at this point, don´t you think? I´ll stop now before I say something that gets me banned. I guess you all got yours so too bad for the rest of us, eh?

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Reply 19 - Posted by: taxed2death, 12/10/2012 9:46:38 PM     (No. 9058676)

What business is it of the government´s how I spend my money, or how you spend yours? The mortgage deduction is actually a political handout not just to homeowners, but to well-heeled bankers, home builders and real estate sales companies. End it.

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Reply 20 - Posted by: avmermaid, 12/10/2012 9:47:16 PM     (No. 9058677)

Bought our very modest second home with thoughts of retirement. Well, the retirement thoughts have been pushed back several years and the value of both places have diminished. The tax deduction is helping us personally stay above water, but just barely.


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Reply 21 - Posted by: curious1, 12/10/2012 10:18:23 PM     (No. 9058706)

If there wasn´t a personal income tax (and whether the 16th was properly approved is one for those late night table discussions) then this whole mess wouldn´t exist and this discussion wouldn´t be taking place. Think about that.

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Reply 22 - Posted by: ColonialAmerican1623, 12/10/2012 10:45:08 PM     (No. 9058733)

Notice there is no talk of eleminating the child credit for those without any income ?

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Reply 23 - Posted by: vinegrower, 12/10/2012 11:16:45 PM     (No. 9058758)

To those of you who think this tax deduction should go away have you thought about what this would do to the construction industry? You think it is bad now- it will never come back.

Also when the home values plunge the property taxes will also go down. We will be headed for a complete depression not just a recession. And I fear this country would never recover.

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Reply 24 - Posted by: blowhard, 12/10/2012 11:53:40 PM     (No. 9058792)

The mortgage interest deduction inflates the cost of housing and we would be better off without it in the long run. The problem, of course, is that those who are depending on it would face a loss in the value of their properties and would be paying taxes just like those who have paid off their mortgages. The existing system is another case of the frugal subsidizing the profligate.



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Reply 25 - Posted by: Trigger2, 12/11/2012 6:24:49 AM     (No. 9058945)

Will those millionaire elitist politicans exempt themselves? Will Barry be exempt from paying property taxes and mortgage deductions on his $35M house in Hawaii? Enquiring minds want to know.

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Reply 26 - Posted by: TXknitter, 12/11/2012 1:58:05 PM     (No. 9059927)

If someone would truly lose their home if this deduction goes away, then they cannot afford that house to begin with. Canada proves this deduction is not necessary for a very healthy home ownership rate. We pay high taxes, appreciate the deduction on our two mortgages but it won´t "break" us if it goes away.

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