Should the mortgage interest deduction be discontinued?

Discussion in 'Politics, Religion, Social Issues' started by kavika411, Sep 7, 2010.

  1. kavika411 macrumors 6502a

    kavika411

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    #1
    [I don't think this has been brought up in a thread here, but feel free to link if there is and I'll close this.]

    I've heard this question come up a couple of times lately. I first heard it on Rush Limbaugh's show last week. I didn't think anything of it as I assumed he found some random blog somewhere advocating it and was creating a debate where there was none. But now, as I write this I am listening to Here And Now on NPR and guest James Kwak is about to debate his belief that "the dream of home ownership has always been a bad idea." I believe they will be questioning the value of the mortgage interest deduction.

    I just came across the USA Today article entitled Experts: U.S. can no longer afford housing tax breaks.

    I admit I have a deep-seeded bias in favor of keeping the mortgage interest deduction, but I'm willing to listen to the arguments against it.
     
  2. Ugg macrumors 68000

    Ugg

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    #2
    I don't believe it should be discontinued but I do believe that it needs to be modified. The deduction was created to encourage home ownership but like so many laws has been distorted over the years by allowing deductions for second homes as well as deductions for multi million dollar mortgages. If you can afford a vacation home or a $20 million dollar home, do you really need a tax deduction?

    What I would like to see is a somewhat more progressive policy. For instance, the interest on the mortgage of a median home price in a particular area would be tax deductible but as the home price increased, less and less of the interest would be deductible. That might be problematic in cities such as New York, but I'm sure that some kind of equitable compromise could be found.

    I see absolutely no point in subsidizing faux chateaux and believe this is one way of also discouraging sprawl.
     
  3. macquariumguy macrumors 6502a

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    #3
    If they need to raise taxes, I can think of a lot of other things to do first. How much would be raised if we ended all tax exemptions for churches?
     
  4. djellison macrumors 68020

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    #4
    I would scream and shout from the rooftops with joy if they did that.

    As for property - I, renting a property - am worse of than someone buying. I don't think that's fair.

    The UK system is good - any profit made on a second property is eligible for capital gains tax. Plus - tax breaks for first time buyers would be good as well.
     
  5. benthewraith macrumors 68040

    benthewraith

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    #5
    Never going to happen. Churches are for the most part non-profit organizations. If you end taxes on non-profits, you would run them out of business. Even churches that raise money from individuals for political campaigns raise them through separate funds independent from the church.
     
  6. Eraserhead macrumors G4

    Eraserhead

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    #6
    I think this seems like a reasonable step forward.
     
  7. Shivetya macrumors 65816

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    #7
    End it.

    Why should non home owners and businesses subsidize how ownership?

    I get amazed at how many people are proud to get money back at the end of the year and point to their mortgage as source of a lot of it. Don't know about you, but that 3k doesn't make up for 9k or more in interest payments.
     
  8. djjclark macrumors regular

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    #8
    In the US there is no deduction for interest on any mortgage more then a million dollars (prorated so on a 2 mill loan only half is deductible etc)
     
  9. Ugg macrumors 68000

    Ugg

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    #9
    Cool.

    Perhaps we need to tie interest deductions to energy efficiency on new homes. Perhaps throw in some sustainability issues as well. Homes closer to transit would receive a greater tax deduction than those in energy hungry suburbia. Perhaps even tie it to square footage on new homes.

    The federal government shouldn't be subsidizing wasteful practices.
     
  10. ucfgrad93 macrumors P6

    ucfgrad93

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    #10
    I don't think it should be removed from a person's primary residence. However, the interest deduction for vacation residences or secondary homes should be discontinued.
     
  11. Eraserhead macrumors G4

    Eraserhead

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    #11
    Aren't houses closer to transit worth more?
     
  12. Shivetya macrumors 65816

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    #12
    It all depends on the neighborhood.

    I won't live in the "city". I like my house, my yard, my neighbors, the peace and quiet, the ability to leave doors and windows open. The peace of mind of living in "suburbia" is worth the drive.

    I did investigate living closer in. What I found were, more traffic, more noise, more light, and more restrictions. Top it off with higher taxes and frankly they can keep it. I will drive my little TDI to and from work and be happy with the commute knowing what I am driving too.
     
  13. MattSepeta macrumors 65816

    MattSepeta

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    #13
    So your proposal, in essence, is to encourage people to live in areas with higher crime rates, higher poverty, higher taxes, higher population density, and a higher over all cost of living?

    I just love you urban-planning types :rolleyes: (PS- I live in the city. Because I want to. Not because the government thinks I should.)

    How about "The federal government shouldn't be subsidizing."
     
  14. Eraserhead macrumors G4

    Eraserhead

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    #14
    FWIW, worldwide cities are usually richer overall than the countryside.

    I think one of the disadvantages of living in a city which isn't dense is that it makes public transport more difficult/expensive to setup - and private car driving is something that is quite heavily affected by increases in oil prices as many other uses are either less sensitive to price changes (e.g. plastic, drugs) or they can be switched to less energy intensive alternatives (e.g. transporting goods by train not by lorry, using high-speed rail instead of flying).
     
  15. colourfastt macrumors 6502a

    colourfastt

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    #15
    Absolutely remove it!! I own 3 homes that were all paid for at the time of purchase and I don't get to deduct a single penny of the cost. If you can't afford to purchase outright, fine, but don't expect to deduct the cost because you're making payments.
     
  16. rdowns macrumors Penryn

    rdowns

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    #16

    Yes, that's what we need, more tax codes.
     
  17. CorvusCamenarum macrumors 65816

    CorvusCamenarum

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    #17
    That's because as a renter, you're most likely paying for the mortgage the owner of the property has on it, plus his property taxes, maybe some insurance, and his profit margin on top of it all.

    IIRC, you recently moved here from the UK. If you're here for the short term, renting is probably the better option, as you won't be stuck with an asset you might have trouble liquidating should the need arise. If you're here longer term, you might be better off looking into buying a home.
     
  18. flopticalcube macrumors G4

    flopticalcube

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    #18
    The window for removing this pathetic sop at middle America is closed. No way you can do anything that might hurt house sales at this point. The time to have removed it was in 2004-2006 when house sales were booming. It was up to the GOP to do this since they held the power at that time and removing a subsidy is smack on the party line. Too bad they didn't have the balls for it.
     
  19. Shivetya macrumors 65816

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    #19
    Can you the screams of racism that would have erupted if they had proposed it? Hell, trying to stop Frank and Company forcing looser rules brought similar claims.

    Its here until its political capital is expended.
     
  20. flopticalcube macrumors G4

    flopticalcube

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    #20
    No pain, no gain. They could have staged it in slowly over say 10 years by lowering the cap by $100000/year. Look at the flak the Dems are getting for health care. Its going to cost them big time in November but matters of principle are worth some loss.
     
  21. djellison macrumors 68020

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    #21
    And he's getting a tax break.

    I see no reason why he should.

    I don't get a tax break for owning and paying rent and insurance and taxes on the home I still own in the UK.
     
  22. fcortese macrumors demi-god

    fcortese

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    #22
    Absolutely not. The home is some people's only investment.
     
  23. flopticalcube macrumors G4

    flopticalcube

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    #23
    Why should other people subsidize someone's investment? The money is simply going around in circles. I personnaly feel that housing should not be considered an investment.
     
  24. Sydde macrumors 68020

    Sydde

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    #24
    What effect would elimination of the mortgage deduction have on development and construction? Seems like it would tend to stifle that part of the industry. Beyond that, I would expect something of a decline in home values to adapt to the increased cost of financing.

    I mean, I would not mind all that much seeing a little less development around here, but if the net result is to turn 95% of the nation into renters, that would seem like a bad thing.
     
  25. Macky-Mac macrumors 68030

    Macky-Mac

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    #25
    this would be viewed as a massive tax increase for middle class home owning taxpayers so it's unlikely to happen
     

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