SALT and mortgage deductions
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@xenon said in SALT and mortgage deductions:
Did my taxes for the first time as a home owner (and therefore not taking the standard deduction).
Made me realize that some people must have gotten a massive tax hike from the Trump tax cut.
Feels like it would disproportionately affect upper-middle class / lower-upper class types. People who make a lot, but primarily from regular income and live in high tax states.
I know - not exactly a ground-breaking insight, but didn't really "click" until I did the taxes myself.
Also disclaimer - my taxes are still lower because of the Trump tax cut (I also live in a no-income tax state)
Hit the blue states which like to pay taxes. I don’t see the issue.
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The mortgage interest deduction is not capped at $10K. You can deduct the interest on up to $750K of debt.
https://www.fool.com/taxes/2020/01/25/your-2020-guide-to-tax-deductions.aspx
The 2020 mortgage interest deduction
Mortgage interest is still deductible, but with a few caveats:Taxpayers can deduct mortgage interest on up to $750,000 in principal.
The debt must be "qualified personal residence debt," which generally means the mortgage is backed by either a primary residence, second/vacation home, or by home equity debt that was used to substantially improve one of these residences.
Investment property mortgages are not eligible for the mortgage interest deduction, although mortgage interest can be used to reduce taxable rental income.
Home equity debt that was incurred for any other reason than making improvements to your home is not eligible for the deduction. -
Sorry I replied as if he said property tax deduction is still there. Before I could edit you replied.
Both are still there, but they’re capped.
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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).
I’m pretty sure the 10K cap is on property tax deduction, not the mortgage interest. There is a cap of only interest on the first 750k borrowed...
Me/rry/Christmas
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@lufins-dad 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).
I’m pretty sure the 10K cap is on property tax deduction, not the mortgage interest. There is a cap of only interest on the first 750k borrowed...
Oh, didn’t read through the thread before I replied. George beat me to it.
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@george-k said in SALT and mortgage deductions:
Standard deduction for a married couple is, what, $25K or so? Throw in a kid, and you're close to $30K.
With the current value of the dollar, It should be more than twice that amount.
Actually, I am all for income tax not kicking in until a person makes more than $65k per year or $130k for a married couple. FICA/Medicare would still be withheld.
Unless there is a public health care option. Then just institute a 5-7% across the board tax on all income below $65k per person.
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@mark said in SALT and mortgage deductions:
@george-k said in SALT and mortgage deductions:
Standard deduction for a married couple is, what, $25K or so? Throw in a kid, and you're close to $30K.
With the current value of the dollar, It should be more than twice that amount.
Actually, I am all for income tax not kicking in until a person makes more than $65k per year or $130k for a married couple. FICA/Medicare would still be withheld.
Unless there is a public health care option. Then just institute a 5-7% across the board tax on all income below $65k per person.
I still support a European style VAT
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@lufins-dad said in SALT and mortgage deductions:
@mark said in SALT and mortgage deductions:
@george-k said in SALT and mortgage deductions:
Standard deduction for a married couple is, what, $25K or so? Throw in a kid, and you're close to $30K.
With the current value of the dollar, It should be more than twice that amount.
Actually, I am all for income tax not kicking in until a person makes more than $65k per year or $130k for a married couple. FICA/Medicare would still be withheld.
Unless there is a public health care option. Then just institute a 5-7% across the board tax on all income below $65k per person.
I still support a European style VAT
I'm a big fan of consumption taxes as well.
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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).
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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.
“Little by little I am learning the art of being quite content by doing very little slowly” ~ Lionel Hardcastle
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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.
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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.
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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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@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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@xenon It's nice enough, but pretty modest - see above.
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@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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The mortgage interest deduction should be full on eliminated.
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@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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@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.
