LIMITS ON MORTGAGE INTEREST DEDUCTION was once a "sacred cow" of tax law. No more.
The American home owner is square in the sights of the budget released today.
On October 25, 2008, a bolt of lightening struck me and I realized that there is no income protection safe from the government's zeal to play chess with the American tax payer's assets.
An article published by the Wall Street Journal, back in Oct. 2008, discussed the government's need for cash to fund programs that were being discussed by members of Congress.
These days, the Wall Street Journal discussed the Obama budget's plan to limit ALL deductions for tax payers earning $250,000 or more.
"But as in last year's budget, Mr. Obama proposed Monday to go further by limiting the value of those benefits, which include deductions for mortgage interest and some charitable contributions. The highest-income earners under current law can lower their taxes by up to 39.6% of those deductions; under Monday's proposal, that would be reduced to 28%". . . . .More.
However, unless I'm missing something, the mortgage interest deduction is the primary interest deduction for home owners. Credit card interest, auto loan interest deductions have been gone for years. What's left??
- Today, $250,000.
- Tomorrow, $100,000.
- 2 years from now? Who knows?
GOING. . . . GOING . . . . GONE!!!
"SORRY, MR. AND MRS. TAX PAYER, THERE IS NO LONGER A DEDUCTION FOR THE INTEREST YOU'RE PAYING FOR YOUR HOME MORTGAGE."
Pretty quiet money grab going on here Lenn. Sad thing is, it is really just beginning.
Kind of takes away all incentive to well, doesn't it?
Not only will this hurt the "rich" but just puts more stress on a citizen that is already at the breaking point. Many people in the upper tax brackets will take their total deductions and reduce the true out of pocket items. They must pay their mortgage so the interest will count as a deduction(even on vacation homes and rentals), but they may limit such items as charitable gifts. Regardless using taxes to pay for overspending never will solve the problem. Stop the spending and I think more people will be willing to look at higher taxes.
This hurts everyone and does create a slippery slope. I hope the NAR and each of us fight this or the housing market will tumble again and for a long time.
How many taxes and higher taxes do the people over $250k take before they yell uncle?
Lenn... I was really tried to avoid this kind of information, because this is just ridiculous... Stupid thinking... so now, for those at 250k or higher in income, the only reason to buy a home as an investment per se, is to build equity in it. Sure, there are other reasons to own a home... but as we move forward, it seems like there are less and less reasons to own a home. Are we stepping on our own toes? Hell, it's a lot worse than this.. and let alone the fact that you are in a much higher tax bracket when above 250k, which Uncle same helps themselves to your pocket anyhow... damn this crap.. sorry.. just ticked.
Lenn, I know that $250,000 sounds like a lot of money but the mortgage deduction is often the only reason people have to itemize. I feel taxed to death. Oh Yeah, now we'll have this great heath care plan. NOT.
Lenn,
I am sure you are right as to their plans. What the heck?
Bummer.
All the best, Michelle
I feel like it's time we got on a boat, named it the Mayflower and sailed out in search of a whole new world! What do we do to change things, I knew that a "vote" for change was a vote in the wrong direction!
Right you are, Lenn. Not everything is about raising taxes but stealing the deductions away on page 4958. Very well hidden!
I hope you're having a great Monday!
Paul
Not at all surprised. Can't wait until we hear what other jewels are in this lovely budget.
Douglas. Indeed. If this stays in, it's just another shot in the heart of the real estate industry.
Suesan. Yes, sadly it does.
#3. Agreed. There is so much garbage in this budget, it makes one want to scream.
Dan. It's the "slippery slope" that concerns me.
Gene. I don't know. We're all going to get a tax increase anyway when the Bush tax cuts end Dec. 31.
Jeff. Real estate isn't much of an investment these days and won't be for some time. I wouldn't say "we're stepping on our own toes". I'd say, "they" are stepping on our throats.
Gary. That is very true.
Connie. The mortgage interest deduction has always been in my qualifying schedule.
Michelle. HA! Did I just hear you throw up your hands?
Verilyn. HA. Maybe we can find an island somewhere. I can hunt and fish and provide a lot of food.
Paul. Indeed. In fact, it doesn't name mortgage inserest deduction at all. But, that's what the item means.
Tammy. We'll hear about it probably starting tomorrow.
Hi Lenn,
NOTHING surprises me from this administration..hang on it looks like we have not seen anything yet!
Dorie. I fear that you're quite right.
Lenn, as always thanks for your insights. This change would have a huge impact on our area...
Tony Cordi
Lenn,
At the rate the national debt is going up the government has to get the money form somewhere and I am thinking we are a prime target. They need to stop all of the help I can't afford it anymore.
Much talk. No action.
Very disappointing the middle is under such attacks from the government.
So many promises........so much disappointment. I wonder if the government has any idea of what actually run the economy.
I have not heard this, Lenn.
Been busying with buyers and sellers.
But, can I say I am not surprised. They are creating a crisis everywhere they turn.
Eternal Vigilance is the price of Liberty.
"No government can guarantee security. It can only tax production, distribution and service and gradually crush the power to pay taxes. That settles nothing. It only uses up the gains of the past and postpones the developments of the future."
- Henry Ford
Good old Henry Ford understood it.
I can only think that this will create even more "strategic foreclosures" why bother owning a home. Seems like they truly want everyone dependent on the government. They have done a fine job taking away any incentive to do well. There is no reason to succeed! Great news. Let's all settle for mediocrity.
It's the classic example of 'watch what the other hand is doing.' While Americans are fed the spin about not raising taxes, the administration slips in the side door and cuts deductions. One way or the other, we pay more.
After this, they will go after IRAs and 401ks.
Is it almost time for a revolution?
Hello Lenn and some very interesting thoughts you have there and some wonderful comments coming across, keep up the great work young lady!
VB ;o)
Why let the "FACTS" get in the way of a good right wing scare headline. For those interested in the "FACTS" read on.
But as in last year's budget, Mr. Obama proposed Monday to go further by limiting the value of those benefits, which include deductions for mortgage interest and some charitable contributions. The highest-income earners under current law can lower their taxes by up to 39.6% of those deductions; under Monday's proposal, that would be reduced to 28%. The bid to lower the limit on itemized deductions stalled in Congress last year amid strong resistance from Democratic and Republican lawmakers. It is also opposed by a battery of interests including Realtors and charities.
http://online.wsj.com/article/SB10001424052748704107204575039132987274858.html
Unfunded wars are not free!
Hi Lenn,
I was surprised and wondered where the money came from in the first round of bail-outs. What else have they got under the floorboards... treats or tricks?
Lenn,
I think you're right. We see this chipping away raise it's ugly head every now and then. I'm not surprised one bit. And that's irrespective of one of the above comments.
This does not sound like the type on incentives that are needed to spark homebuyers' interest right now. This does not bode well...
You either have a crystal ball or are very smart! I think the latter. :)
Oh boy... so I cap my income at $249K?
Like we didn't see that coming!!
Lenn:
Yes, this is just the beginning. We will be paying for the mess of generations to come, and bonus will be paid for the same period too.
Interesting thought process, but I'm not sure those dots connect
Lenn...
I don't understand the reason for these punitive changes in the code. It's a slippery slope all right!
Lenn,
I sure hope that it doesn't pass. Each day it is something else.
Wendy
Pretty soon we are all going to be sitting in an IRS office while they prepare our tax returns and tell us how much money we owe!!! They have got to come up with a way to pay for health care for those who can't or won't work.
When will they realize that recoveries are almost always due to tax cuts, and not more taxes. Soon we won't have any of our own money left to spend. This is ridiculous. I've heard some talk about them changes the capital gains back to the way it was years ago....another bad move.
How do you recover a housing market when you take away all of the benefits of home ownership + investing in real estate. This administration is just ass backwards.
I wonder if he would consider taking away a deduction to be a tax increase?
It makes perfect sense if we were all supposed to live in the same box, wear the same clothes, and drive the same Yugo.
Years ago I headed an organization that supported kids sports. Costs to run the program were increasing and more kids wanted to play. There was no easy choice. We had to increase fees, cut some parts of the organization, limit membership.
I see very little different in todays political state. Not just this administration, but the out-of-control need to increase 'MY' program, and cut yours. At no cost to me or mine, take it from your budget.
My view is not popular, but it is reality. I think we will see very tough choices coming, we are all the cause and the cure.
I think John Novak summed it up very succinctly above. Not technically a tax increase, right? :)
Those that make over $250,000 can take advantage of savings plans, not to mention afford health plans that most realtors cannot. Our average income is WELL below that. And in most parts this is the case of most citizens. Now, if we are talking about brokers,.............. Though many make only a moderate mount of money, many are doing quite well, thank you very much. Sure this market has hit them, but let's face it Bill Gates can cut his income in half, and yet he and his missus will do quite well on what they will have left.
Lenn - Like Kim says ...why bother owning a home. This is crazy. If it were not for the the mortgage interest deduction we might as all be renters. That was what convinced me to ever be a homeowner. Great informative post and catchy title too, I missed this earlier and just posted something with a similar title - I guess I will go back and edit now. :)
Lenn,
I too had not yet heard this one...it has been a busy day...showing and listings all day....thought I would check in on AR before trying to settle down for the night...gosh I sure hate to see this....
Lenn, you're right! decreased deductions = higher taxes... pretty simple.
the last properties to increase in value during a boom and decline in value during a recession are typically higher priced homes. eliminating the tax incentive at this stage will only exacerbate the situation and make the continued decline that much more pronounced!
Hi Lenn! -Quiet? I hear it loud and clear and just don't understand why everyone doesn't. We're headed for disaster and my hopes are that Scott Brown is just the first small movement of Americans who are screaming to get our country back!
OUCH! I wish I could say I'm surprised, but nothing surprises me with our $#%*$%&*$*^& government anymore! I wish we could give them ALL the boot, and start from scratch!
Wow, wondering what's next. It's like a double edge sword. Tax credit for buyers but eliminate the the amount of interest you can write off...Not sure if the govie is helping or hurting. One big political cloud!
There is no reason for mortgage interest to be tax deductable, Its not fair that renters dont get the same goverment subsidy as homeowners. It is not fair that cash buyers dont get the same subsidy as borrowers. As I recall when I first filed a tax return with a schedule A, all interest was tax deductable, everything I financed (cars, furniture, my house, my bar tab) everything nickle I spent on interest was tax deductable. The government wisely eliminated most interest rate deductions. In the interest of fairness the mortgage interest deduction should be phased out too.
Im really struck by the inconsistancy shown among us here on active rain. When there was a government proposal to encourage universal health care, I read lots of comment about the evil of government involvement in the health care market. And yet we seem to want to keep government involved in housing..... I dont get it
In a major market, say DC for example, a 250K income does not allow one to live like royalty, so if that were to occur, the impact could be broad, deep and have a profound and negative impact on the housing industry.
And so continues the "change".
The end of the mortgage deduction would a huge hit for a large number of people and could effect the real estate market which we've already discovered effects the economy.
I guess maybe we're not supposed to be concerned about things like this?
Ron Comment # 49- No, I want the government out of our biz. The government should not be involved with the housing market or the health care. The answer is to fire the IRS. Get rid of the tax code. We should have a flat tax or even just a sales tax. And if the government can't pay, they don't get to play.
Lenn- I guess with the proposed changes- our brokerage will stop making money at $249K. I wonder who I will have to lay off, our own daughter? They have no clue about how private small mom and pop biz's operate. There is no incentive to work for more than 249k because too much will be taken given away. I have talked to so many people who are doing calculations about where they have stop earning in order to not be giving the first half of what they earn to a irresponsible government that only knows how to spend beyond their means. What a great way to limit the incentive to work.
Chris is right # 50- In some parts of the country 250K you can live in luxury and other parts you will barely get by. The 250K being rich is an illusion based on perception not reality. And let's not forget these people are also being taxed with property taxes, state taxes, ( not in Florida:)) sales taxes, school taxes, special taxes, city taxes, county taxes, and on and on and on. Soon 250K is more like $125 and at that I don't know many places where you would not be struggling with that take home pay.
Nester and kateriha #53
Ive aways liked the idea of a national sales tax, but what do I know
Heres another perspective (much better researched and presented than my comment
New York Times Feb 2
From the desk of David Dee,
Lenn, I think it would be terrible thing if they reduced the mortgage interest deductions. Then what is the benefit of home ownership.
In regards to Ron's comment about the unfairness compared to renters, why would renters get to deduct the payments? It makes absolutely no sense. I just don't see the point. There is no base to compare homeowners vs renters. Renters are not responsible for the repairs/maintenance of the home. They do not have to pay property taxes and the list go on. If tenants are given the same privilege as homeowners, what is the sense for those wanting to purchase a home when they can get the same tax break as renters. There's a fallacy in that reasoning. I agree with Katerina that government should stay out of the biz.
I'm not liking what I'm reading but we were dealt an awful hand and now it has to be fixed. This should annoy the top earners but at least from what I read the rest should be ok. The difference from 35% to 28% is what they are talking about. Government (we the people) need to find a was to balance this budget and reduce the country's debt. Anyone have any other ideas?
Amazing, but not surprised. It sounds like " Heads I win, tails you loose". Thanks for sharing.
Ah, that dirty little "I" word rears it's ugly head in all types of ways. The back-end tax hike.
Inflation
Currently a oxymoron could be an honest government! Since the government is supposed to represent the people governed and we elect them to do so I can only hope that November will make a resounding impact that for the majority of citizens this is not the change that many voted for!
I do not believe this country was founded on "distribution of the wealth" principles but on freedom and liberty and I personally feel the Bill Gates of the world who have contributed so much to our society, created jobs and made our lives better deserve their rewards. Great minds and creative juices do not need to be stifled and muted for their roles in our society and by "distribution of the wealth" tactics. In my opinion it is their type of minds and capabilities that made this country great.
On a lighter side I have never hollered sooooo much at TV political news channels as I have in the last year and a half! Thank heavens for cable TV and channel 54 for just plain old good humor shows -- generally. Mash, Sanford & Sons, etc are a great relief.
Sue's Opinion of Robin and Sue
Interesting points here. City Mouse /Country Mouse. Either way the rats are controlling the slice of cheese.
Howdy and Mornen Lenn
I sure do hope the folks that said they were Voten for change. Are happy with the bed they have made to lie (lay) in, just a little play on words.
What a crook. I am so hoping he is a one-termer.
Sorry folks. I just typed responses to about 25 comments and got zapped and all information lost.
I'll try to get to it again. I appreciate your comments.
They have to raise money from somewhere and these are the first steps. . I see trouble ahead for all of us.
I don't think this is the change that America voted for. The National government needs to live on a budget like the rest of us if you don't have the money DON'T SPEND IT. More taxes does little to help when you increase spending by record amounts year after year. My suggestion is to send everyone of them home to run a small business of their own so they can see how it works in the real world. See if they spend like a drunken sailor when it is their dime.
Lenn:
It is beyond my understanding why it is not evident to our government that the housing market is still in need of major help. Taking away any part of the mortgage interest deduction is just adding insult to injury right now.
I hope this is not true and as you say it's a sacred cow, I do not know what Nit-Wit would propose such an idiotic idea but it would be disastrous not only now but ANYTIME. Though proposed I do not think it will pass because there are too many people and entities that would protest. Again, some moronic pencil pusher added this on the behest of who knows...Incredible how deep it gets in Washington. It's takes wings to stay above it!
Interesting article that Ron cites in #54 ... opposing view that makes sense to me.
Hi Lenn,
It is really frightening when you think what may be yet to come---I don't think it can go on for much longer without totally undermining the financial condition of the entire country. Not to stir things up (or maybe to do just that!) I think the average person in this country has started to see just what is going on in the government and let's hope it's not too late; the next election will be more than telling--we already know there is unrest!
This is exactly how goverment works in changing current tax laws !!! They don't initially have to make drastic changes, but merely get a FOOTHOLD ! Once the public goes back to sleep on the issue and the foothold has been established they start taking more and more away by further slashes !!!
Is anyone surprised? Did anyone even listen to any of his campaign speeches? He said he would level the playing field! He said he would bring Change to the American People! He said all along he was going to do exactly as he is trying to do, so whats the hubbub all about! This is just the beginning, he SAID he would increase Government and he is doing it! He is a man of his word, I gotta say that much for him.
Lenn Point of information - the WSJ article you are referencing is dated February 2009. It might be helpful to wait until the current budget proposal details are reported. I doubt enough members of either the House or Senate will enable such legislation to become law in this year's political climate
Well I guess they have to figure out how to pay for all those failed programs... the stimulus bill didn't work so the government now wants to have a second round of stimulus and call it a jobs plan.
The Bahamas are sounding better everyday.
Until I actually see it as law I am not going to get that excited but I am sure NAR and other groups will fight it like they have always done so. Perhaps if we would concentrate on telling our representatives that we don't want to keep the war going and push them to end it we would not have to worry about taxes on these programs. Until we organize and get our voices heard the "elite" that run the government will continue making war so the few will benefit at the expense of all of us.
Announcing before its an actual done deal on this or any other subject is like all those that jumped before the home buyer's credit was officially extended.
I am competely amazed at what I hear out of Washington these days (guess I'm not surprised)
Lenn -
Congratulations! To all of us ActiveRainers who have responded - WAY TO GO!
Many great comments and references. Ron, #54, I read the article. Thanks for the opposing view. Nestor and Katrina, #53, excellent comments.
I must say that I am encouraged by all. We are awakening. We have a representative government. I challenge each of you to contact your representatives and senators and give them your opinions as well. If we do not voice our concerns and act (VOTE) on our beliefs, then we deserve the government we get.
Last comment on government, we need to cut the spending. As individuals and business owners, we have to live within our budget. Shouldn't the government. I favor throwing out the tax code and implementing a flat tax, for everyone.
I just don't see it happening as this has been discussed before among many administrations, even on a state level there has been many discussion of how to tax or change taxes - for property taxes. I think the negative impact that would come out of such a change in tax deductions to the housing market would have a large negative impact. The housing market is already being manipulated by the banks today.
We need to wait until we actually see the budget. It is tough to believe what many stations are reporting because it seems no one reports the news without being on one side or the other. This is like a middle school fight between the major parties. It is so sad what this country is coming to. I hope this recession will be over soon, doesn't look like it. We need changes and it is going to hurt to get there, that is all to it!
What the H___! I am so sick of the government interferring....Hopefully, this will be Mr O's only term...unless the public can't see or hear what the heck is going on in our country today.
Thanks Lenn, for the info. this will definitely hurt.
Lenn, You know all the successful people should be punished, right? Seriously, this is not good news for all the small business owners and I agree with you- next he will define 100K is the limits. UGH!
Lenn, You know all the successful people should be punished, right? Seriously, this is not good news for all the small business owners and I agree with you- next he will define 100K is the limits. UGH!
Believe what you want to about this legislation. If one believes that this legislation will curtail people wanting to own homes that is ones right. If this will make someone not want to do the best his/her best or earn over $250,000 that is his/her right. The Warren Buffets and the Bill Gates of the world didn't seek fortune only to say, I'll have to pay too much in taxes. I worked for a real estate investment company, one client actually said "My goal is to pay a million dollars in TAXES." That means he made much more than that. I personally do not believe this or any legislation will stop people who want to be successful.
This would come at a perfect time. Home prices and the stability of the real estate market is tenuous at best. Changes like this will not only hurt people at tax time, it could very well have a detrimental impact on home values. If you eliminate the tax deduction and also figure in low digit (or no) appreciation, all of a sudden renting starts to make more sense. This is not good for anyone who owns real estate. Instead of taxing more, maybe they should consider spending less!!
Matt. Thanks. What a novel idea, government spend less. Have you ever seen it happen?
Adrian. This isn't about paying taxes. This is about confiscatory taxation of government.
Kristi. The history shows that the higher the taxes, the worse off the economy is going to be.
#81. Agreed.
Rebecca. Agreed.
Sajy. Why should we wait until it's too late???
Christine. Indeed, by the banks and the government.
Ken. Cut spending. I support that 90% of ActiveRainers would support that novel idea.
Michael. Right you are. Incremental tax increases are not supposed to be noticed. HA! Blogging changed that didn't it?
Carrie. He said that we need to "spread the wealth". A clever but revealing metaphor for "take from some and give to others."
Art. Fixed.
#74. How's real estate practice in The Bahamas???
#75 My post isn't about the war. It's about the mortgage interest deduction.
Tony. Nothing surprises me any more.
Fernando. Indeed. So do I.
Kirk. They are spending like drunken sailors, which is an insult to all sailors.
Claudette. Because they missed Economy 101 which taught that the housing industry fuels the economy of the US.
Russel. I see this as a fullfillment of the goal of "spreading the wealth".
Sue. I'd buy a national sales tax.
Paula. What the admisistration doesn't realize is that the mortgage interest deduction helps low and moderate income home owners as well as the higher income folks. They don't understand our industry at all.
Thanks to folks who reblogged this post. I appreciate it.
Re-blogged by 6 agents
David. It's easy to compare apples to oranges. It's also an obfuscation and I don't buy the comparison. Investing in property is a major contributor to our economy.
Frank. Goodness, I have many ideas. Stop the earmarks and cronyism. Get rid of the deadwood in government and save the pay and lasting benefits thereto. Since 50% of Americans pay no federal or state tax, that is hardly fair. If everyone who now pays nothing paid a mere $100 a year, it would raise about $5,000,000,000. I could go on and on, but why bother.
Lisa. That's about the way it is.
Carla. It's coming down the road fast and furious.
Robin and Sue. You wrote: I do not believe this country was founded on "distribution of the wealth" principles but on freedom and liberty
Thank you for that.
Allison. That is the funniest line of the day. Thanks.
Dale. Thanks for the light note. We are getting change allright.
Joseph. From your lips to. . . . .
this is yet another hit to the housing market. The tax deductions is a major reason for some to buy. There is major benefit to the tax deduction, do they understand what a negative impact this will have? Of course not!
Ron. I don't want government involved in housing. They muck up everything they touch. This is about taxing and targeting one group against another.
Chris. HA. My interest tax deduction doesn't pay for he tuition I sponsor. If I didn't pay that, folks would be getting education grants. Mmmmmm.
Michelle. Indeed.
Christine. I don't believe the government understands the contributions to the economy made by the housing industry.
Katerina. I want the government out of our business too. Especially the income redistribution departments.
I'm comfortable with a national sales tax too. It would never fly with this administration because their goal is income redistribution.
Carol. I have to find your post. I'll look for it.
Lori. So do I. Most of us do.
Troy. Raising taxes on anyone in any income level makes no sense in a recession.
Debe. Indeed. But, get ready for the politics of personal destruction that will dominate this fall.
Lisa. Wouldn't that be a wonderful idea??
Markita. Welcome!! You know how important that mortgage interest deduction is to home buyers. If they don't owe any taxes today, that doesn't mean that, as their income goes up, they won't benefit from it.
Kyle. I don't believe that they know anything about the housing market.
Richard. I believe it's a continuation of the goal of redistribution of wealth in the country. Success will have to be it's own reward because the income ladder will be punished.
Wendy. Indeed. It's hard to keep up.
Carol. Health care is available to all. What the government wants is control of the money generated by all that health care.
David M. I don't believe that the government cares about the housing market.
Lane. I'm sure he can double talk that away.
#39. I believe you are more "spot on" than you may realize.
Randy. Thanks for dropping by. You are right. Far too many in Congress simply feather their own nest.
Jason. Yeah! Right!
John. Real estate agents who have low income aren't paying any taxes.
Yes I'll bet many of us self employed business owners will cap our owner distribution at $249,000.
I cant believe what I reading. We want government out of our business until or unless it benefits us. We are all against the government doing special favors for special interest groups unless the special interest group is us. We want the government out of markets, except out market.
As Pogo used to say "We have met the enemy and he is us"
Hi Lenn~ If this talk is implemented...it will certainly hurt the high-end of the market!! The affluent in this country will put their cash elsewhere and RENT!! I really hope that the country can survive 3 more years of this rhetoric and confusion!
How else will they pay down the $ trillion deficit?
J. Philip. BINGO!!!
Stephen. It's getting harder and harder as we get in deeper and deeper.
Ron. Perhaps. The government does that. Now that the housing market is in the sights of the government, it will suffer. Problem is, when housing suffers so does the economy.
Erica. Indeed. The force of unintended consequences. However, I believe that the limit will be lowered quickly to far less than $250,000 or eliminated altogether.
#26 Green Mountain Realty. Thanks for the link. It took me to another subject close to my heart. The grab for estate taxes. Lets tax the person inheriting an estate. Never mind that the estate has paid taxes for years. Now lets get more.
Oh you say, it is only 45% over $3.5 million dollars. That would be an estate of a rich person. My Grandfather & Dad worked hard at being farmers to accumulate land for farming. They succeeded. Now when my Dad passes away his 4 kids are not going to be be able to keep his land unless we find a way to pay that estate tax. Do you feel sorry for us inheriting land that is POTENTIALLY worth $3.5 million if we sell. I would think you don't. You would only see the fact that the asset being inherited is over the threshold for taxes so therefore we must have the ability to pay almost half of that in taxes. My Grandfather & dad held their worth is in their land not in cash. So our family will have to cough up $1.575 million dollars for the estate taxs. Guess we will run down to the ATM when the time comes.
My husband is self employed and over the years we have seen the deductions he can take being reduced or eliminated or moved to different schedules with caps on the deductions. Tax increase? Not in the true sense of the word but the net effect is the same. Pay more taxes.
While it is a great cry by many to think make the rich pay more, it affects us all. You say unfunded wars are not free, I ask you: Is ANYTHING free? Our US Budget encompasses all and spending needs to be reduced in all areas or needs to be fiscally responsible in all areas.
Lenn, I agree with you. It is only a matter of time to reduce all deductions.
Faye. You make a good point about the threshold for deductions that will affect farmers disproportionally.
Farmers are self employed and therefore fair game for taxing as are small businesses which includes real estate practitioners.
Lenn,
Well just shoot me. I mean how much more can this seemingly "class war" can we all take. I will say this if you keep prodding a sleeping giant soon enough it will wake up and squash you.
This is not the "change" we "Hope"d for or wanted.
Trevor. Change to what is what I kept asking. Now I know.
Larry. It is indeed a class war.
The vast majority of farmers get other government subsidies for what they grow or do not grow, as the case may be... and those remain... the fact is the government is trying to balance its budget, something most of the people here have complained about since the administration took office... noting of course that these same folks rarely complained during the previous adminsitration...
We may call it a class war, and as one of those who will lose by this change, I can say that it wont really imapct my budget much... we gain an incredible amount of services from our government, and we should pay for them.
We shall see if this remains in effect after the financial crisis we are still in the midst of... and for those who say they take it away, it never comes back... think back to the start of the Bush administration, when many taxes were cut on the wealthiest earners in the country... that changed then, and it was taken back now... so these things do change depending on the times we live in.
Paul. I look at the spending plans for this government and I know that the taxes it will take to fund that level of social engineering will confiscatory or so far in debt that the country is likely to default.
What I can't find in the proposals is anything to spur growth.
I don't like it. We shall see.
Let's check back a year from now.
The whole thing is so twisted up and missed matched and bad timing...the problem is when you add this to the other things the government is doing, the changes in rules about FHA loans, the mess with FREDDIE and FANNIE, the tax credits keeping the market artificially elevated, which will crash some when it ends in June...When you put everything together it is really looking like we might have a very scarry summer ahead.
Amy. I agree. It's just one manipulation after another. Real Estate is best left to the natural market forces.
O', I like this change. I am going to stop paying any and all bills I have. If I lose my house, car and all possisions big deal. The government will take care of me taking everything from all of you that work. I will stand in line for my cheese and live in a crap ass box the government makes one of you build for me. What a great place this is turning into.
Lenn says: "Real Estate is best left to the natural market forces." Why is that so hard for the government to understand? Perhaps the agenda is not logic but ideology. Maybe?
Ross. Funny. Perhaps you can also get some "Obama money".
Buddy. Thanks. I believe that just about everything should be left to market forces.
I am of the firm opinion that "everything the government touches turns into crap".
Of course it's ideology. Sadly, I have a more frightening opinion of the motivation for the direction we're being taken.
Yes Lenn,
I am ready for a new era, you don't hunt then you don't eat, period.
All of this is so unbelievable but true!!! We could all really be in trouble if we don't keep in touch with our congressmen and our local rpac groups. One giant voice really does help.
Lenn, I believe I hear the rumblings of a revolution coming. I pray it is a peaceful one.
Once again, Lenn you raise our heads and make us look around. I have to admit that I am finding it difficult to imagine how we are going to turn this all around. Where is the outrage??
Yikes, my high-end clients may decide renting makes better financial sense than owning.
Well those folks who make 300k will just have to find some other ways to lower their taxes; like max out their retirement accounts or - just pay more taxes.
It will not happen. Lets remember the power of the National Assocaition of Realtors. We will all need to work together and be sure write that check to RPAC. This next election is very important!
Sleight of hand...."Look, we are not raising taxes"...while in the other hand we are taking away deductions. Voila! More revenue.
I'm with Lane, it is a form of taxation to take away a deduction. We end up paying more taxes!
First of all, Lenn thank you so much for this post. It is a subject matter that I'm very interested in. Here is my question, "When will it end?" Will we be able to Rent vs Buy analysis?
C. Lloyd. When will it end. When the American economy is in such bad shape, the people rise up and THROW THE BUMS OUT. We'll put better bums in.
Frank and Sharon. Of course. They think we're stupid.
Michael. I haven't been impressed with the performance of the NAR in the past few years.
James. And, of course, some of those folks making $300,000 will be real estate brokers who will eliminate offices, support staff, advertising, etc. Be careful what you wish for.
Norma. We are nearing the point whereby the only buyers are folks who want a HOME and not merely a shelter.
Bob. I agree. Actually, I see a repeat of 1994 coming if the public isn't turned by lies, trickery and deceit. . . . again.
Barbara. Keep the pressure on the Congresspersons. They worry more about their jobs than the RPACs worry about supporting the right persons.
As a Canadian, I have a different perspective. Not to comment on the right-ness or wrong-ness of Obama's decision (I did watch the State of the Union address), but we don't get to deduct mortgage interest period! Enjoy!
Deena. I'm not surprised.
The other sise of this argument is, limiting/capping tax expenditures to 2009's baseline number vs. discretionary spending, of which mortgage interest deduction is one of the biggest, fastest growing costs to the federal budget, would cut the deficit over the next decade by a little north of $14 trillion. The plan to cap spending being proposed by Republican Senators, to include Medicare and Social Security, is projected to save less than $2 trillion.
Also, Canada never has given a tax deduction for mortgage interest. I am pretty sure many Canadians own homes too.
John.
This isn't Canada.
Yikes, it feels like our entire financial system is starting to unravel & that's a scary thought.
Tina. Indeed. And they keep spending more and more.
What's also of concern here is that any reduction in the amount would adversely impact parts of the country in different ways as the Federal Tax system does not take into account any regional differences.
For example couples making more than $250K a year would have their taxes raised. In some states $250K is a lot of money and the average home price is around that figure.
In California and other coastal states a family making $250K a year is hardly rich and average housing prices are often around 3X that number.
Louis. Indeed. Think of the average NY Efficiency Condo selling for $1,000,000.
I wonder what else this turkey is going to do. I wonder how many people think he is the savior now?
Bill. I suspect that there a a lot of folks who never ever admit to any mistake nor do they ever change their mind.
When I look at our collective national and individual debt, I have become suspicious of the ulterior motive of a complete take over of the U.S. economy by the government and transforming it to a Socialist state except worse, with the government, not just using the power of confiscatory tax collection but actual ownership of vital economic sectors. Wait, that sounds like Communism. GEEZ. Now folks will think me crazy.
Maybe I am.