Comments

1
Why should renters continue to subsidize home owners via the mortgage interest deduction? I would have preferred complete repeal of the deduction and not just for new purchases, but for existing mortgages as well. Doubling the standard deduction will go a long way for those middle class people to benefit, renters included.

I in general disagree with leading to further expansion of the national debt, but this tax cut package isn't as bad as I thought it might be. I still have no faith in Congress being able to pass anything though.
2
If you own a home in Seattle you aren't middle class no matter how hard you close your eyes and pretend that you are.
3
According to the old vs. new chart here, if I stay at my current income and my girlfriend stays at hers, my taxes will stay the same, hers will go up (I'm middle income, my gf is low income). We're not married and don't have kids so no help with child tax credits there.

So yeah, as usual, the republican's claim that they're the ones who lower taxes are bullshit, as I knew they would be.
4
While I think the overall tax plan is a sham to help the rich, I'm totally fine with capping the mortgage interest deduction at $500k. After all, it wouldn't impact anyone whose home value has appreciated due to a local booming real-estate market; it would only apply to those who have a mortgage for more than $500k - and they can afford to pay.
5
Also, keep in mind that the republican plan to "pay" for these tax cuts for the ultra rich isn't to also cut spending. No, their plan is the same as usual, increase debt. Put it on the national credit card. I predict with great confidence that if a democrat ever gets elected president again, those same republicans will blame the democrats for high national debt.

I assume the tea party and the so-called "fiscal conservatives" will come out strongly against this tax cut proposal for that reason, yes?
6
The tax bill is shitty, but the $500,000 cap on the mortgage interest deduction is the least-shitty of all the shittiness. If you buy a house for $700,000 and put 20% down, a 30-year mortgage at 4% means your annual deduction is reduced by $2400. Doubling the standard deduction might actually be beneficial to middle-class homeowners.
7
@1-@4 I'm with you on this one. Lets stop pretending that if you can afford a 500,000+ house you are part of struggling middle class, if you can afford that kind of Mortgage, you can afford the taxes.
8
@1 Landlords deduct mortgage interest payments on rental properties. If homeowners are precluded from taking the same deduction, aren't homeowners then subsidizing the rental market?
9
@8 That isn't quite true. Income properties are not allowed to use the mortgage interest deduction. I believe you can deduct though for second homes. It is a plan designed to provide incentives to purchase homes that the owners will live in. An incentive I think is outdated and unnecessary.
10
I think the NAHB might get a little geared up about this. like Nuclear Meltdown geared up.

11
Tdumbp demands calling it the Ku Klux Kut Act.
12
@11 Surprised you didn't work a "Amerikkka" in their like a college sophomore.

Seattle homeowner here. All depends how big your mortgage is. Mine's less than $270K at last refi (3.1%!).

Yet again, where's the tax relief for the upper middle class?
13
The mortgage interest deduction is regressive! It's not like people who can't afford to buy a house (i.e., the new "middle class") can deduct a portion of their rent. When I lost my house in the great recession and got back in the rental market, my taxes shot up A LOT.
14
GOP plan, help the rich and punish blue strongholds.

@8 Mortgage interest on a rental isn't deducted in the same way as you would interest on your primary residence (from your personal income), but it can be deducted from the rental income you receive, along with property taxes, insurance, maintenance, and other business expenses*. If that were no longer allowed the price of running a rental business should rise, which would impact renters (though not nearly to the degree that short supply and other factors do).

@1's logic, however, seems to be that I'm subsidizing every tax credit available to someone in a different position than me. Parents, retirees, the blind... OFF MY LAWN!

*I'm not a landlord, but I think I'm mostly correct here.
15
@9 Landlords' mortgage interested is deducted as a business expense.
16
@12: in THERE like a college sophomore. that's a high school freshman mistake.
17
@9 (and possibly @14), mortgage interest on rental properties is unquestionably deductible.

IRS Pub. 527:

"Interest expense. You can deduct mortgage interest you pay on your rental property. When you refinance a rental property for more than the previous outstanding balance, the portion of the interest allocable to loan proceeds not related to rental use generally cannot be deducted as a rental expense. Chapter 4 of Pub. 535 explains mortgage interest in detail. "

IRS Pub. 535:

"You can generally deduct as a business expense all interest you pay or accrue during the tax year on debts related to your trade or business. Interest relates to your trade or business if you use the proceeds of the loan for a trade or business expense."

I can dig into the tax code if you want specifics, but there is really no debate about this issue.

18
Many European countries, with a high cost of living, do not have this deduction, and yet they have similar rates of home ownership.

19
@18 True, and if this tax credit had never existed I think America would be fine. The trouble is we've got a generation of middle-class homeowners that considered this deduction as part of the criteria to determine their price range. Removing it would cause a lot of stress for a lot of people.
20
“THERE like a college sophomore. that's a high school freshman mistake”

I’ll own that one. Graduate school messed with my brain.
21
@14, @15, @17. Got it and thank you. I was only thinking of it in the personal income sense, not as a legitimate business deduction.

@14 You're right my initial comment should have been more specific. The mortgage interest deduction is one that I don't agree with, but certainly the government has the right and ability to favor or disfavor certain activities over others. In this case the government has made the determination to promote home ownership. My argument is I don't think that's a necessary or worthwhile tax expenditure. I think an increase in the standard deduction and elimination of the mortgage interest deduction is a fairer system, but I totally understand that tax fairness is entirely subjective.
22
Maybe this tax plan supports the (apparent) city policy to discourage home ownership.
23
@22 Exactly. Suddenly The Stranger cares about home owners.
24
Wait, what benefit to homeowners?

I guess it isn't like this everywhere, but suppose home price is governed by how much mortgage people can remotely afford to pay. If people show up with more money, prices go up. If they run away and leave a less wealthy population behind, prices go down. Now take away a small tax credit on mortgage payments - same as getting a pay cut, you have to lower your sights a little. But everyone else does too, so, it seems to me, you'd be right back to looking at the very same houses, competing with the same crowd, price tag a little lower but the buyer will pay the same.

So who gets that tax benefit money? The seller. Real estate agents, banks.

I admit the above analysis may not apply perfectly to Seattle, where anecdotally many houses are purchased with cash.
25
This is not the problem with this thing. Since when are you in bed with the RealtorsTM and the well-off homeowners?

The problem is the whole giant "give to the rich, take from the children." Please don't get sidetracked.
26
@24 primarily their loss of sale value. As you say, the deduction is baked into inflated prices. So removing it deflates them, leaving current homeowners holding the bag.
27
Holding the bag on top of their preexisting windfall, mostly, so no crying.
28
@Roger What

If you're a homeowner then I'm Jeff Bezos.

I love RPG's!
29
Rocket Propelled Grenades?

Easy to be a homeowner in Seattle if you have a plan. If you're a f*ckup with a pastry arts degree from Seattle Central COMMUNITY College, well, that's another story isn't it.
30
@21 I hear you. Funny when a group a people knows just a liiiiittle about something we all pounce like starved dogs.

@27 A bag of money this year, a shit-ton of debt in other years. Hard to know.

Like others have said, this isn't the worst part of this plan, but it's an obvious line item that'll get an opposition base (rightfully) fired up.
31
There already is a mortgage interest deduction cap at $1 mill, this will half that. Maybe there should be some cap, but wouldn't it make more sense for it to be based on the market value of homes (instead of an arbitrary value), since that will inevitably increase?

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