SALT and mortgage deductions
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wrote on 3 Feb 2021, 18:59 last edited by
A few clarifications.
Mortgage deduction applies for debt up to $750k.
That's only going to be north of $20K if you have a 4%+ rate and/or are in the early part of your mortgage cycle (with more going to interest).
The SALT deduction is capped at 10K. That includes property, state income tax and even sales tax (rules are a bit wonky).
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@lufins-dad said in SALT and mortgage deductions:
The Mortgage Interest Deduction is still there,
It’s sorta there. They cap it at 10k. My property taxes are almost 35k. I have no mortgage, so unless my charitable giving is north of 14k I don’t itemize.
Someone in my neighborhood with a big mortgage would have gotten hit even harder. (They capped that too).
wrote on 3 Feb 2021, 19:03 last edited by Renauda 2 Mar 2021, 19:05@jon-nyc said in SALT and mortgage deductions:
My property taxes are almost 35k.
Seriously?
I can't imagine residential property taxes in that order of magnitude.
I thought mine were high at just over $5K. They are not deductable from income tax either.
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@jon-nyc said in SALT and mortgage deductions:
My property taxes are almost 35k.
Seriously?
I can't imagine residential property taxes in that order of magnitude.
I thought mine were high at just over $5K. They are not deductable from income tax either.
wrote on 3 Feb 2021, 19:06 last edited by jon-nyc 2 Mar 2021, 19:07Yep. Its a relatively modest house too. 2400 sq ft on 1/3 acre lot.
It seems outrageous (and it is), but most people moving here from the city are giving up city income tax and private school tuition in exchange, so its a deal. (property taxes in the city are quite low)
If I lived over the border in CT it would be half for the same house. But the commute to the city would be longer.
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@jon-nyc said in SALT and mortgage deductions:
My property taxes are almost 35k.
Seriously?
I can't imagine residential property taxes in that order of magnitude.
I thought mine were high at just over $5K. They are not deductable from income tax either.
wrote on 3 Feb 2021, 19:06 last edited by@renauda That's on the higher end. But not atypical.
For myself - I have a modest home (our first one) in an admittedly good neighborhood. But it's not too much more expensive than the median Seattle price.
Property taxes are 10K.
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wrote on 3 Feb 2021, 19:08 last edited by
I would say it's atypical.
NJ as a state has the highest property taxes in the nation, but at county level it's Westchester, NY.
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I would say it's atypical.
NJ as a state has the highest property taxes in the nation, but at county level it's Westchester, NY.
wrote on 3 Feb 2021, 19:10 last edited by@jon-nyc said in SALT and mortgage deductions:
I would say it's atypical.
NJ as a state has the highest property taxes in the nation, but at county level it's Westchester, NY.
The unsaid part is that I'm assuming you have a nice house, Jon
So not atypical from that aspect. But yeah, I get what you're saying. The tax rate is particularly high where you are.
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Yep. Its a relatively modest house too. 2400 sq ft on 1/3 acre lot.
It seems outrageous (and it is), but most people moving here from the city are giving up city income tax and private school tuition in exchange, so its a deal. (property taxes in the city are quite low)
If I lived over the border in CT it would be half for the same house. But the commute to the city would be longer.
wrote on 3 Feb 2021, 19:10 last edited by jon-nyc 2 Mar 2021, 19:11@jon-nyc said in SALT and mortgage deductions:
(property taxes in the city are quite low)
My Brooklyn place was over 2x the value of this place and the property taxes were under 5k.
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@jon-nyc said in SALT and mortgage deductions:
I would say it's atypical.
NJ as a state has the highest property taxes in the nation, but at county level it's Westchester, NY.
The unsaid part is that I'm assuming you have a nice house, Jon
So not atypical from that aspect. But yeah, I get what you're saying. The tax rate is particularly high where you are.
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A few clarifications.
Mortgage deduction applies for debt up to $750k.
That's only going to be north of $20K if you have a 4%+ rate and/or are in the early part of your mortgage cycle (with more going to interest).
The SALT deduction is capped at 10K. That includes property, state income tax and even sales tax (rules are a bit wonky).
wrote on 3 Feb 2021, 19:13 last edited by@xenon said in SALT and mortgage deductions:
Mortgage deduction applies for debt up to $750k.
I am quite OK with capping mortgage interest deduction at certain level. I can understand allowing mortgage interest deduction to promote home ownership, but I see no point in subsidizing MacMansions.
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wrote on 3 Feb 2021, 19:15 last edited by
The mortgage interest deduction should be full on eliminated.
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Yep. Its a relatively modest house too. 2400 sq ft on 1/3 acre lot.
It seems outrageous (and it is), but most people moving here from the city are giving up city income tax and private school tuition in exchange, so its a deal. (property taxes in the city are quite low)
If I lived over the border in CT it would be half for the same house. But the commute to the city would be longer.
wrote on 3 Feb 2021, 22:28 last edited by@jon-nyc said in SALT and mortgage deductions:
Yep. Its a relatively modest house too. 2400 sq ft on 1/3 acre lot.
About the same as our house; a 2700 sq ft two storey with developed basement and double detached garage on a 150 x 60 ft lot. Mature neighborhood.
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wrote on 3 Feb 2021, 22:34 last edited by Renauda 2 Mar 2021, 22:35
@jon-nyc said in SALT and mortgage deductions:
The mortgage interest deduction should be full on eliminated.
Canada has never had such a deduction on residential properties. We also manage just fine to buy houses and pay out mortgages without too much undue stress in its absence. I wouldn't want such a deduction introduced either.
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wrote on 3 Feb 2021, 23:16 last edited by
It’s really a bank subsidy.
The older folks here will remember when all interest was deductible here, even credit card and auto. It was a big banking subsidy.
It’s not even a subsidy for homeownership, it’s a subsidy for “home borrowership”.
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It’s really a bank subsidy.
The older folks here will remember when all interest was deductible here, even credit card and auto. It was a big banking subsidy.
It’s not even a subsidy for homeownership, it’s a subsidy for “home borrowership”.
wrote on 3 Feb 2021, 23:18 last edited by@jon-nyc said in SALT and mortgage deductions:
The older folks here will remember when all interest was deductible here,
All interest?
I remember when all taxes were deductible. I used to keep track of taxes on my utility bills (phone, heat, etc) and claim that deduction.
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@lufins-dad said in SALT and mortgage deductions:
The Mortgage Interest Deduction is still there,
It’s sorta there. They cap it at 10k. My property taxes are almost 35k. I have no mortgage, so unless my charitable giving is north of 14k I don’t itemize.
Someone in my neighborhood with a big mortgage would have gotten hit even harder. (They capped that too).
wrote on 3 Feb 2021, 23:26 last edited by@jon-nyc said in SALT and mortgage deductions:
@lufins-dad said in SALT and mortgage deductions:
The Mortgage Interest Deduction is still there,
It’s sorta there. They cap it at 10k. My property taxes are almost 35k. I have no mortgage, so unless my charitable giving is north of 14k I don’t itemize.
Someone in my neighborhood with a big mortgage would have gotten hit even harder. (They capped that too).
Move to Florida.
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@jon-nyc said in SALT and mortgage deductions:
@lufins-dad said in SALT and mortgage deductions:
The Mortgage Interest Deduction is still there,
It’s sorta there. They cap it at 10k. My property taxes are almost 35k. I have no mortgage, so unless my charitable giving is north of 14k I don’t itemize.
Someone in my neighborhood with a big mortgage would have gotten hit even harder. (They capped that too).
Move to Florida.
wrote on 3 Feb 2021, 23:35 last edited by Jolly 2 Mar 2021, 23:36@jolly said in SALT and mortgage deductions:
@jon-nyc said in SALT and mortgage deductions:
@lufins-dad said in SALT and mortgage deductions:
The Mortgage Interest Deduction is still there,
It’s sorta there. They cap it at 10k. My property taxes are almost 35k. I have no mortgage, so unless my charitable giving is north of 14k I don’t itemize.
Someone in my neighborhood with a big mortgage would have gotten hit even harder. (They capped that too).
Move to Florida.
Or Louisiana.
Nice cottage, close to LSU, and your property taxes would be considerably less....
https://www.zillow.com/homedetails/498-S-Lakeshore-Dr-Baton-Rouge-LA-70808/66265727_zpid/
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@jolly said in SALT and mortgage deductions:
@jon-nyc said in SALT and mortgage deductions:
@lufins-dad said in SALT and mortgage deductions:
The Mortgage Interest Deduction is still there,
It’s sorta there. They cap it at 10k. My property taxes are almost 35k. I have no mortgage, so unless my charitable giving is north of 14k I don’t itemize.
Someone in my neighborhood with a big mortgage would have gotten hit even harder. (They capped that too).
Move to Florida.
Or Louisiana.
Nice cottage, close to LSU, and your property taxes would be considerably less....
https://www.zillow.com/homedetails/498-S-Lakeshore-Dr-Baton-Rouge-LA-70808/66265727_zpid/
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@jon-nyc said in SALT and mortgage deductions:
The older folks here will remember when all interest was deductible here,
All interest?
I remember when all taxes were deductible. I used to keep track of taxes on my utility bills (phone, heat, etc) and claim that deduction.
wrote on 3 Feb 2021, 23:53 last edited by@george-k said in SALT and mortgage deductions:
@jon-nyc said in SALT and mortgage deductions:
The older folks here will remember when all interest was deductible here,
All interest?
I remember when all taxes were deductible. I used to keep track of taxes on my utility bills (phone, heat, etc) and claim that deduction.
86 tax bill removed deductibility of 'personal interest'
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wrote on 3 Feb 2021, 23:56 last edited by
time flies
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wrote on 3 Feb 2021, 23:59 last edited by
From a WaPo piece after the 1986 tax bill. The same law removed local sales taxes also removed personal interest deduction (ex-mortgages).
State and local sales taxes will not be deductible. Income, real-estate and property taxes will be deductible.
Those who take the standard deduction cannot deduct charitable contributions, but itemizers can.
Deductions for interest on non-mortgage loans, such as credit-card debt or auto loans, will be phased out. Sixty-five percent can be deducted in 1987, 40 percent in 1988, 20 percent in 1989, 10 percent in 1990 and none thereafter.
