SALT and mortgage deductions
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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.
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It's interesting to read now.
Remember these names?
Flanking the president as he signed the 879-page Tax Reform Act of 1986 were Republican and Democratic lawmakers influential in bringing about its passage -- and a few who worried to the end that the dramatic changes would harm middle-class taxpayers, slow the economy and impair the ability of U.S. companies to compete abroad.
House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.), the congressional leader who took the measure over its first legislative hurdles, watched intently over Reagan's right shoulder as the president signed the law with 12 pens, one for each letter of his name. Senate Finance Committee Chairman Bob Packwood (R-Ore.), who persuaded his reluctant committee members to resist entrenched opposition, stayed in Oregon to campaign for reelection.
Sen. Bill Bradley (D-N.J.), dubbed by Packwood the "godfather" of tax overhaul, was also in Oregon -- against his will. Bradley, who had been campaigning for Democratic gubernatorial hopeful Neil Goldschmidt, was fogged in at the Portland airport. He and Packwood watched the bill-signing on a special television hook-up at the Portland Marriott and later talked by telephone to Reagan.
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Of course I remember those names.
I also remember George Will commenting on the new tax law:
Q: So, the new tax law lowers rates, but also eliminates a lot of deductions. What's to prevent congress from raising the rates while keeping the deductions off the table?
Will: Nothing.
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Of course I remember those names.
I also remember George Will commenting on the new tax law:
Q: So, the new tax law lowers rates, but also eliminates a lot of deductions. What's to prevent congress from raising the rates while keeping the deductions off the table?
Will: Nothing.
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For shmoes like you and me the estate tax is the big one. The bar where that kicks in has been raised considerably.
401k kicked in just before then, but has been growing in deductibility and use.
But we've also had a proliferation of tax credits, mostly for low income people but some for people with kids regardless.
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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/
@jolly said in SALT and mortgage deductions:
@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/
Piker.
https://www.zillow.com/homedetails/11001-Highland-Rd-Baton-Rouge-LA-70810/66335986_zpid/
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@george-k said in SALT and mortgage deductions:
@jolly taxes are $8900???
DaFuq?
I read that as taxes were $1036, the assessed value was $8900...
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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”.
@jon-nyc said in SALT and mortgage deductions:
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”.
Never thought of it that way. Makes sense though.
As if the banking sector needs subsidies.
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The Trump standard deduction came just in time for us, as we get close to paying off our house. I think the highest itemized deductions we ever hit were $23-24k. I think the year before the new standard deduction we had dropped to about $19k.
Our 2600 sq foot house, built in 2004, is worth maybe about $425,000. I thought I was rightfully grousing about our property tax bill, which still is less than $5k. You do need to remember we do not pay sales tax in Oregon, so that helps, but they just instituted a vehicle tax for purchases. Used to be that you would pay about $150 to license your new car. Now it is about $500 for a $20,000 car.
