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The prospect of limits on deductions of 17k or 25k would seriously upend the rent vs buy calculus, not to mention the affordability of NYC property. Will housing prices crash?
he has no intention of doing this.
most people who buy in Manhattan don't give a damn about that little deduction. they have to earn enough to afford it, ie coop, or be foreigners who don't get the deduction anyway.
If you earn enough to afford Manhattan RE, then most likely you AMT out of deduction anyway. But I agree with CC: it's a political third rail...Romney won't touch it if elected.
I'm no accountant, but I was under the impression that the two common deductions that are still deductable for the AMT are the mortgage interest deduction (which I realize is limited to interest on mortgage debt of up to $1MM) and the charitable gift deduction. Is that not accurate? One thing that certainly does hurt NY'rs is that state and local taxes are not deductible from the AMT calculation.
jojo, I'm no accountant either, but I do know from my own experience that my only deductions are interest expense on mortgage and it gets AMT'd [sic] every year. My mortgage debt is <$1mm.
Not sure who's doing uwsbeagle's taxes, but it's the RE Tax that gets AMT'd and is useless to what I would assume is most manhattan owners. The mortgage interest deduction is still incredibly valuable, at least that's the effect it's had on my taxes and I'm subject to AMT. Not sure if we're saying the same thing here or not, seems to be a bit of confusion.
Back to the point, though, I think the impact to Manhattan would be negligible, because IF in fact deductions were capped at $25k (guessing many people hit that easily with just their mortgage interest in this city), the offset is supposed to be a reduction in marginal tax rate would would theoretically balance out. So it would be a net zero effect to the tax payer.
That said, I think it's all a crock of BS because there's no way the numbers work in his plan as stated, so if he is elected, I'm guessing we'll see something entirely different from what's being discussed right now.
Speaking of tax expenditures that benefit owners, it'd hurt if they started taxing the imputed income from residential-RE assets.
E.g., I get $25K-$50K in tax-free income, depending on the what-it'd-rent-for figure. Doesn't seem as if it'd be feasible to calculate that, but that might've been said once about income tax in general.
Romey kept saying that the "PERCENTAGE" share of income tax paid by the top earners won't change. Of course, the whole tax revenue pie will shrink across the broad. I don't know how you guys take on this argument. He will lower my posted tax rate but my effective tax liability remains unchange? Why would that help me improve my financial situation and stimulate the economy? If I am going to support him for that, then I must assume that my effective tax liability will actually be reduced. I must be betting on him being untruthful to the other lower income families.
Also foundamentally I hate the idea of eliminating deductables. The spirit of providing deductables is to allow tax payers to contribute to the economy more efficiently. Deductables are defined as justifiable spendings on the economy of ones own choices. Instead of paying tax and let the government decides how to spend that money, I choose to use that money onto the charities of my choice, onto acquiring a home (which will create other economic activities), onto investing into my children's education (which hopfully they will become more useful citizens of this country) and so on. Why is it so great about lowering my posted tax rate but taking away my choices? and have the thick skin to tell me that my effective tax liability will be unchanged and is better for me.
rent vs buy calc never worked in NYC. the RE price in NYC is hyped by the unfairness of USA, the 1% is doing too good while the 99% suffer
Someone at the 5th percentile is suffering?
Funny all Obama says is that he is going to increase taxes, that will sink NYC RE
come on, brooks2, you know the increase is nothing comparing to the local tax
and those who own property in nyc are either too poor to pay more tax or too rich that they don't need to pay tax in usa
What is concerning me here is he keeps saying it but there is no visible public backlash. This opens the door for Obama, random house republicans, or really anyone to start listening to the economists and end it.
It may not affect high-income, but a lot of $600k condos in brooklyn and queens are financed heavily by people relying on the deduction. Additionally, a lot of the ~3-500k market in manhattan is populated by people who are mid 100's in salary and need the deduction to be more than 17k or 25k for tax+interest.
which is precisely why this will never happen. many more things to worry about. not this.
for condos under 500k, household income of 80k/year is well enough
Here's an example picked out of a hat (I'm making up a fictitious owner with no connection to who bought it)
Let's say this condo http://streeteasy.com/nyc/sale/683260-condo-2-northside-piers-williamsburg-brooklyn
was bought by someone 3.5% down and getting an FHA loan of 3.3%, expecting to pay 2695 less tax benefit at 35% (fed + state) = 2174/mo. To achieve that same payment with no tax benefit it would sell for $410k.
This is perhaps not the proper way to value real estate, but you would be mistaken to think there aren't a lot of first time buyers who buy based on what they "can" pay.
once again, this is why it won't happen.
1) Policies created a massive real estate bubble,
2) add clueless Americans but mostly housewives and househusbands who buy $500 worth of lettuce bc it's on sale!
3) mix in fancy terms like 'net housing cost', tax deductible, and 'equity building'
Add in my penis/house is bigger, sexier and tighter than your floppy vagina.... And poof! Bubble.
columbiacounty, you are so impatient that everyone accept your point of view. Even w67 realizes that he has to repeat himself. For some reason, you think it's below you, but your resume wouldn't suggest anything is below you.
"jojo, I'm no accountant either, but I do know from my own experience that my only deductions are interest expense on mortgage and it gets AMT'd [sic] every year. My mortgage debt is t deducting state and city tax? *That* is the big reason NYers get hit by AMT.
Either you are making a huge mistake, or you just forgot the real reason.
makes very little difference
BEC just did a report on it , said prices would fall 5% at most
We pretending 5% isn't significant? And I'd assume with high incomes, even more important in NYC where tax rates are higher.
Though, that still sounds low... I figure if you take NYC marginal rates, going to take a healthy hit.
Separately, one of the local papers, I think the times, just did an article noting the Dems are strongly considering the Romney idea of giving you a fixed limit on deduction amount. Have to figure that is going to hit here hardest...
You're kidding, right? Obama is the only one who kept going on and on about raising taxes. As a gesture to avoid the fiscal cliff, House Republicans are giving in by requesting that he minimize deductions, not raise tax rates.
Both parties realize that all this borrow and spend is at a tipping point. The only difference is Democrats want to keep spending like its hot and raise taxes while Republicans want to cut spending and not raise taxes period.
The country's real estate prices are sunk if they minimize deductions. It's the only way my rental income on my old apt is covering expenses and barely. If they get rid of that, not only will home prices sink, rental rates will need to go sky high, a double F U for homeowners who bought into the promise of interest deductions. I don't see this happening. It would be political suicide for Obama. But then again, it's his last term.
"Both parties realize that all this borrow and spend is at a tipping point. The only difference is Democrats want to keep spending like its hot and raise taxes while Republicans want to cut spending and not raise taxes period."
Sounds like you've been suckered by the Republicans talking points. Per FORBES, Republicans have raised spending by far more than Democrats. Clinton was the lowest increase since... Eisenhower.
If this is why you support the republicans, you need to get your head checked.
Head-check available at a Grateful Dead concert near you.
Do they make sure you have lice? Although at that checkpoint, it wouldn't be the head they're checking anyway.
More bleeding-heart liberal garbage talking points from somewhereelse, as usual. Brainwashed, one-track eight-track tape. Pinko.
It's simple: Democrats only want big government and higher taxes and Republicans only want liberty and free military and free freeways and free freedom and no taxes for anyone. Get it right.
Don't read the comment above yours, that's how.
Not more impressive than somebody who thinks all Grateful Dead fans have "lice".
"Counting heads" is what the promoter does before every concert to see if the show should start on time or give the audience more time to arrive at the venue and take their seats.
At The Grateful Dead concerts, we refer to it as "Counting Dead-heads".
Not all "Dead-Heads" are hippies. Not all hippies have "lice".
Many are doctors, lawyers and other professionals.
But one would have to go out of their apt. every now and then to have any idea of what happens in the entertainment/concert world.
Dead-heads are flowers that are way past their prime and must be cut out so that more can grow.
Shows should always start on time, except those that shouldn't start ever.
another non-informative comment of no interest.
Shows should start when the audience is given time to arrive during traffic-jams and public transportation delays.
That's how, why and when starting time is delayed.
"Are the white trash Americans and terrorists bombing Gaza really coming together as a voting block? "
It's true that more and more white trash Americans now feed by the terrorists who are bombing Gaza, or at least brain-washed by them. It's just a matter of time that most new generation of rednecks become house slave of the terrorists bombing Gaza, when the old rednecks are all gone.
"The country's real estate prices are sunk if they minimize deductions. "
In the short run, sure, but in the long run, no. Almost no other rich country subsidizes home ownership like the US, and yet there are and have been real estate bubbles all over the OECD. And home prices are just as high or higher in many other major OECD cities as they are in NYC or SF. In he most comparable places - Canada and Australia - homes are just slightly smaller at every income level but home-ownership rates are the same as in the US.
OECD? Way to pick an obscure irrelevant organization. Aren't Slovaki, Slovenia and Mexico on the list? What about Caonima's Gaza Strip terrorists? And aren't they headquartered in France? At least the UN is located in a flood zone in New York.