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You Mortgage Deduction is NEXT.

justabubba

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seems narrowly tailored:
... Commission officials are expected to look at preserving these breaks but at lower levels, people familiar with the matter told the Journal. ...
 

Aunt Spiker

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What purpose does the mortgage deduction serve, anyway? I have a home, pay 2 mortgages on it - and have never claimed it so I actually don't know what it is.
Anyone care to enlighten me?
 

UtahBill

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What purpose does the mortgage deduction serve, anyway? I have a home, pay 2 mortgages on it - and have never claimed it so I actually don't know what it is.
Anyone care to enlighten me?
It encourages people to buy a house when they don't need one. Think of it as a subsidy for the real estate business, loan companies, etc.
 

UtahBill

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:rofl

indeed!
I had an agent tell me once that mortgage interest is a tax credit, not just a deduction. And have had several others say that we NEED a mortgage to get the interest deduction. Nobody NEEDS it, it is just a bonus to get a part of the interest back at the end of the year. You are still out the rest of the interest, and the mortgage company gets it.
I would rather pay more in taxes than interest. It is cheaper in the long run. And with savings rates being so low, it is probably a better "investment" to pay extra on the principle instead of letting Wall street play with your money....
 

upsideguy

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Deficit Commission Weighs Dropping Mortgage Interest Deduction - FoxNews.com

Your mortgage deductions seem to be the next target for the Obama Admin.
Obama's Admin. wants to keep on spending and somebody has to pay for it.
I hope it doesn't go through.
This is the problem with political debate in this country: we all get twisted off on non-issues while the real issues just cruise on by.

First off, read the article: it is about a bi-lateral commission that is looking at how we balance the budget. Should they not look at everything? It would be intellectually dishonest to not consider every angle of cutting expenses, raising taxes, cuttting tax deductions, restructuring government. It doesn't mean any particular thing will happen or even be recommended.

Second off, consider the practicalities of this.... there is no way such a proposal would have any political traction --- way too much downside. It has as much chance of passing as a constitutional amendment to stop flag burning or the advent of single payer health insurance.

Let's restrict our pantie bunching to real issues and not try to distract others by yelling "the sky is falling" where there are no issues. Please apply common sense in the future.
 
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Harry Guerrilla

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What purpose does the mortgage deduction serve, anyway? I have a home, pay 2 mortgages on it - and have never claimed it so I actually don't know what it is.
Anyone care to enlighten me?
Bill has covered the main parts of it.

It is mostly good for those that have high enough incomes, that they itemize their taxes, instead of taking the standard deduction.
There is a lot of fraud in itemization.

It's moronic because you can't deduct interest on cars or any other loan you take, but for homes, it's all good. :doh
 

UtahBill

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Bill has covered the main parts of it.

It is mostly good for those that have high enough incomes, that they itemize their taxes, instead of taking the standard deduction.
There is a lot of fraud in itemization.

It's moronic because you can't deduct interest on cars or any other loan you take, but for homes, it's all good. :doh
Long time ago, you could deduct interest on cars, and more, but that went away. You can borrow against your home equity to buy a car, that makes the interest deductible.
I think it was Uncle Ben Franklin, or maybe Cousin Mark Twain, said "those who don't understand interest, pay it, and those who do understand interest, collect it".
Even so, people who save money and collect interest are making those funds available to others to borrow, with the bank acting as a commission collecting entity. The bank is using YOUR money to loan to others so they can compete with you in the market place. If the borrowers weren't out there using your money to purchase non-essential goods, the demand would be lower, and prices would be lower.
Right now interest rates are so low that it makes no sense to save, except to have a buffer against losing your job.
 

cpwill

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It encourages people to buy a house when they don't need one. Think of it as a subsidy for the real estate business, loan companies, etc.
exactly. i have no problem getting rid of this distortion of the market via the tax code.

in fact, let's get rid of all deductions with the exception of healthcare, education, and child-raising.
 

TheGirlNextDoor

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What purpose does the mortgage deduction serve, anyway? I have a home, pay 2 mortgages on it - and have never claimed it so I actually don't know what it is.I
Anyone care to enlighten me?
I itemize and use this deduction every year. How nice that they did away with claiming deductions on credit cards and vehicle interest.. now mortgage interest too?

Hell. I might as well file short form. :?
 

UtahBill

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exactly. i have no problem getting rid of this distortion of the market via the tax code.

in fact, let's get rid of all deductions with the exception of healthcare, education, and child-raising.
and all subsidies to the various markets....we would be better off paying full prices than to have the govt act as a middle man to subsidize certain industires.
 

UtahBill

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I itemize and use this deduction every year. How nice that they did away with claiming deductions on credit cards and vehicle interest.. now mortgage interest too?

Hell. I might as well file short form. :?
Everyone should use a home equity loan first, if you really must borrow. The banks won't let you borrow more than your house is worth, minus the amount you still owne on it. That makes all your debt interest deductible. Rates are usually lower as well.
Our only debt is $39K in a home equity loan, and it is a bit over 4%. After the big family cruise in January, we will start paying down on that aggressively.
Credit card debt is the most stupid debt to carry. If you can qualify for a home equity loan, use that to pay off the credit cards and other non-deductible debt, and then DESTROY all but one card, and that should be a debit card.
This is free advice that is worth far more than I am charging for it. I know lots of people who had much more earning opportunities in life, but they squandered their money until they spent more than they earned, and kept at it for years. Now, they can't retire....
 

Aunt Spiker

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I itemize and use this deduction every year. How nice that they did away with claiming deductions on credit cards and vehicle interest.. now mortgage interest too?

Hell. I might as well file short form. :?
I'm so lost - I've never claimed a deduction.
Why would one need to claim a credit-card deduction or deduction on vehicle interest?

Ok - I'll have to just read up on what deductions are (or were) . . . because I'm without a clue.
 

rathi

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The tax code is so inefficient and abused because of its complexity. Getting rid of most deductions will go a long way to reducing the overhead.
 

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I'm so lost - I've never claimed a deduction.
Why would one need to claim a credit-card deduction or deduction on vehicle interest?

Ok - I'll have to just read up on what deductions are (or were) . . . because I'm without a clue.

There was a time when credit card interest could be deducted on an itemized return. Today interest on loans, and cc are loans, cannot be deducted if the debt is incurred for personal benefit.

From the IRS:

"Types of interest you can deduct as itemized deductions on Form 1040, Schedule A include investment interest (limited to your net investment income) and qualified residence interest. You cannot deduct personal interest. Personal interest includes interest paid on a loan to purchase a car for personal use. Personal interest also includes credit card and installment interest incurred for personal expenses. Items you cannot deduct as interest include points (if you are a seller), service charges, credit investigation fees, and interest relating to tax–exempt income, such as interest to purchase or carry tax–exempt securities. For information on points, refer to Topic 504. For information on investment interest see Publication 17, Your Federal Income Tax".

HTH
 

BWG

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UtahBill said:
Long time ago, you could deduct interest on cars, and more, but that went away.
Dulcinea said:
There was a time when credit card interest could be deducted on an itemized return. Today interest on loans, and cc are loans, cannot be deducted if the debt is incurred for personal benefit.
Yeah, I wonder if the OP was as upset with that as with this. I'm thinking...not...;)

On Oct. 22, 1986 Reagan signed a bill that eliminated interest deductions for consumer loans, which included cars, credit cards, etc.
 

justabubba

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I'm so lost - I've never claimed a deduction.
Why would one need to claim a credit-card deduction or deduction on vehicle interest?

Ok - I'll have to just read up on what deductions are (or were) . . . because I'm without a clue.
you have probably been using the standard deduction rather than itemizing
it would not be a bad practice next year to compute your taxes using the standard deduction as well as compute your tax obligation after taking all available itemized deductions
what you have been using is probably going to still be what you use, but until you make the comparison you cannot be sure that you did not pay too much in taxes
 

Red Crow

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Yeah, I wonder if the OP was as upset with that as with this. I'm thinking...not...;)

On Oct. 22, 1986 Reagan signed a bill that eliminated interest deductions for consumer loans, which included cars, credit cards, etc.
I am not upset about anything, this is a deduction on your tax return and it averages to 300 to 500 Dlls. per household. It will hurt the people who are unemployed and that's just my observation, not that I am getting upset over it because it doesn't matter to me.
 

Aunt Spiker

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Now I'm not lost - I read up on just what deductions were, when they were applied on forms and so on - now I've got the whole concept in mind.

It all makes sense.
 

UtahBill

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The way things are going I am glad I am debt free.
You don't truly know freedom til you have cleared out all your debts...
For certain, it is important to be debt free before you retire. My wife's folks didn't have much retirement income, just SS and a small Idaho State teacher's retirement, but with no debt, they managed just fine.
 

cpwill

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You don't truly know freedom til you have cleared out all your debts...
truth. i've always lived that way; it's been amazing what i could do that none of my contemporaries could.

mind you, i have yet to take out a mortgage; so we will see how fast i can get out from under that thing.

but once i'm there? man. i'm set.
 

ptif219

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You don't truly know freedom til you have cleared out all your debts...
For certain, it is important to be debt free before you retire. My wife's folks didn't have much retirement income, just SS and a small Idaho State teacher's retirement, but with no debt, they managed just fine.
It is important with the things Obama is doing
 

tryreading

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Yeah, I wonder if the OP was as upset with that as with this. I'm thinking...not...;)

On Oct. 22, 1986 Reagan signed a bill that eliminated interest deductions for consumer loans, which included cars, credit cards, etc.
I came here to post that about Reagan, you beat me to it.
 
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