Steve's Intentions (argument)???????

reaper - not sure about steve's intentions - but if you made ABSOLUTE KILLING in this market, more power to you, and we are happy for you. THe point that I (a self confessed real estate "realist" that others term "bear") and others who share my POV are trying to make is taht the next 10 years will not be like the last 10 years.

Taking your apple analogy, if you bought at $1, and it's now at $50 - you made a killing. But for a new comer to come in and buy at $50 - there are no guarantees that it'll go to $2500. It could well go to $20. Note that if it goes to $20, those that bought at $1 will still do well - just not those who bought at $50.

The posts are less intended for those who already made a killing - it's for those that are stepping in for the first time.

Hope that clarifies .. but ofcourse, Steve should post his own POV

The issue with steve is that he distorts all his facts to fit his conclusions. Many of his opinions are not credible and he refuses to acknowledge when he is wrong even when it is incontrovertible.

"Many of his opinions are not credible and he refuses to acknowledge when he is wrong even when it is incontrovertible."

Which ones are not credible?

Please i beg everyone not to anser Stevejhx queation. He;s still in fantasy land that his crappy property on Fire Island is worth over 500 thousand.

eric_cartman, well said.

houser, I showed you the link:

http://www.fireislandpines.com/properties/profile.cfm?PropertyID=2275&typeID=1&priceID=2204

identical layout, identical view.

Please do answer the question - I'm all ears.

steve, isn't this listing just for sale? not sold, so how are you extrapolating value of your place from it?

and if you are a listing or sale to get a value for your place, then why not do the same for the city? because a nearly exact comp for my apartment (purchased for just over $1 m) just went to contract at $1.3 m. actually, my place is nicer and has a slightly better location. so was my decision to buy a bad one?

yet you continue to say anyone who buys is an idiot, and that buying never makes sense.

reaper - I don't know if he has an agenda or not (my guess is he's just a lonely man who needs to entertain himself), but if anyone, bull or bear, thinks that their postings here have any influence on the market, they are really fooling themselves.

Stevejhx as you know anyone as as evillager stated that's an asking price. I hardly doubt anyone would buy a co-op of all things in Fire Island for 575,000. If you can get 350,000 for your place I'd take it and run.

steve I was reading the ad(from your link)for the place similar to yours on Fire Island. It reads as follows

"Recently renovated two bedroom Co-Op with Harbor views. Sit on the deck and watch the boats full of boys pull in!"

Now how sexy and enticing is that. Not sure if the ad was trying to attract a female buyer or a male buyer .
Maybe you can fill us on the details---- cutey

Actually, that listing sold for $565,000, there was an offer on the one next to it for $555,000, but the owner took it off the market.

My point was that last year those units were selling for $605,000 with no view and not updated, so prices have been falling.

evillager: "anyone who buys is an idiot, and that buying never makes sense."

I never said either of those things. What I've consistently said is that buying owner-occupied real estate is a capitalized expense. When it's cheaper to buy than it is to rent - which it often is - then it's better to buy. And vice versa. And I said that owner-occupied real estate is not a good investment if you're looking at it on the basis of return on assets. The stock market makes far better returns over time.

houser, though your last post does not dignify an answer, I will anyway. It's owned by a woman.

steve, you said "renting is ALWAYS better than buying", which is pretty much the same thing as "buying never makes sense"

you have also contended that buying is 2x as expensive as renting, which I have pointed out to you is not the case in my neighborhood. closest rental comps to my apartment are avalon bowery and the ludlow, both of which are slightly more expensive yet worse apartments.

so I ask you again - was my decision to buy a bad one?

steve, you're contention that you must use your effective tax rate when estimating the benefit of the tax deduction of mortgage interest rather than the marginal tax rate was ludicrous, and not credible.

evillager, I said that it is always better than buying if you look at buying as an investment. It is not a good investment. You'd be better to rent and put your money elsewhere.

If you look at it as a capitalized expense, then there are times when it's better to buy and other times that it's better to rent.

I don't know if you made a good or bad decision. I haven't seen your apartment, I'm not that familiar with the neighborhood. If it's cheaper than what you could rent a comparable place for, then it's a good decision.

LICComment, you don't know what you're talking about. When the Fed does these calculations, it uses the effective rate, not the marginal rate. I've said it before, I'll say it again, this time I'll give a different - perhaps easier for you to understand - example.

Mortgage interest is tax deductible.
Margin interest is tax deductible.

You pay $100 in mortgage interest.
You pay $100 in margin interest.

You deduct margin interest at your 26% marginal rate.
You deduct mortgage interest at your 33% marginal rate.

You will pay $2.60 less in tax for margin interest.
You will pay $3.30 less in tax mortgage interest.

Why is your mortgage tax break greater than your margin interest tax break, when they are both exactly the same deduction?

That's why what you're saying is ludicrous, and not credible. All deductions that are the same must be treated the same. In this case they would both be deducted at that 29.5% effective rate so as not to favor one deduction over another, since they are identical in nature.

People are buying owner-occupied real estate for many reasons. It is one thing when all your possessions is futon, TV and rollerblades, another is when you have kids and you suddenly have to move out, because property that you renting was sold by its owner.
Some people like security of knowing that after 30 years of constant payments they have chunk of money for retirement (even though they are not making an ABSOLUTE KILLING), some have enough will and consistency to put that difference aside and enough knowledge to invest it elsewhere (hopefully not in the next WorldCom/Enron).
Whatever makes sense for you and where you are in life.
Yes, buying owner-occupied real estate is a capitalized expense. But not everything in life about return on money assets either.

steve, we went through the whole marginal v. effective tax rate on another thread where several people tried to break it down into the most basic terms so you could understand. Really, we tried to make it so simple that a 12 year-old could figure it out. Yet, you still either are too confused to understand or too dense to admit when you are foolishly wrong.

Yep, I am new to this particular thread today but the first thing I thought of when Steve asked where he was wrong and refused to acknowledge it was the marginal vs effective tax rate issue.

Because I'm not wrong. Because all deductions that are the same must be treated the same.

Mortgage interest is tax deductible.
Margin interest is tax deductible.

You pay $100 in mortgage interest.
You pay $100 in margin interest.

You deduct margin interest at your 26% marginal rate.
You deduct mortgage interest at your 33% marginal rate.

You will pay $2.60 less in tax for margin interest.
You will pay $3.30 less in tax mortgage interest.

Why is your mortgage tax break greater than your margin interest tax break, when they are both exactly the same deduction?

stevejhx the cost to take a ferry and back to fire Island can really add up. Plus you purchase a place that you are not using all year. Don't you think it would of been smarter to rent a summer cottage in Fire Island to to buy?

houser - good point - Being that most people only rent for the weekend and week rentals are dirt cheap I see rentals for $400 for the weekend... that would be 1600 a month and that would be maybe 4 months...

Meanwhile that apartment I talked about above was in the same ball park price range but, brought in over $3000 a month rental - we can subtract $1000 maintenance...

Lets just call the rental market even but, FOR THE SUMMER MONTHS!!!!!

No doubt in my mind I'd rather own in NYC right now and I'd shop a better deal that that little condo of love.

Not to mention that the Fire Island market is crashing right now. Who would even think of buying something out there? In this market? Prices are at least 2x more to buy than to rent. Anyone thinking of visiting Fire Island should rent and negotiate hard. Anyone that owns should prepare for a bloodbath, it is going to get very ugly.

Actually, when I bought it was cheaper to buy than to rent.

And if I rented it now I would more than cover my costs.

It's usable from April 15 to November 30.

Prices have fallen about 10%-15% from their peak last year.

Now back on topic: Why is your mortgage tax break greater than your margin interest tax break, when they are both exactly the same deduction?

Just see this thread to view steve's nonsence with respect to marginal and effective tax rates:

http://www.streeteasy.com/nyc/talk/discussion/3764-jpmorgan-cutting-55-of-bear-staff

"And if I rented it now I would more than cover my costs."

Rents are crashing steve, I'm not sure you could cover your costs. Especially when your unit loses 40-50% in value over the next 12 months

of course it was cheaper when you bought steve...
but explain why you're renting now?
again. i cannot respect someone who claims to be an authority but missed one of best real estate markets ever.

"Why is your mortgage tax break greater than your margin interest tax break, when they are both exactly the same deduction?"

Thats the topic of this thread? Where in this thread did anyone say that except you?

"Rents are crashing steve, I'm not sure you could cover your costs. Especially when your unit loses 40-50% in value over the next 12 months"

I didn't buy it to rent it, and I have no plans to. I also have no plans to sell it.

However, I agree that the market is softer.

"of course it was cheaper when you bought steve... but explain why you're renting now?"

I own on Fire Island, I rent in Manhattan, because to buy a similar apartment in Manhattan would cost me twice as much.

LICC said, "steve, you're contention that you must use your effective tax rate when estimating the benefit of the tax deduction of mortgage interest rather than the marginal tax rate was ludicrous, and not credible."

"but missed one of best real estate markets ever."

I don't look at owner-occupied real estate in that manner, although I did, in fact, make a small fortune in NYC and Miami.

I'm sorry, but no one who has made "a small fortune" rents a place for $4200/month

LICC, rather than refer back to a thread that you obviously didn't understand - wherein you tried to claim that I was saying that your effective tax rate is higher than your marginal tax rate, when I said the exact opposite - just answer once and for all to put an end to this nonsense: why is your mortgage tax break greater than your margin interest tax break, when they are both exactly the same deduction?

Steve - didnt you see the headlines?

In yesterday's Times, Josh Barbanel crunched some May numbers, and he reports that the median and average Manhattan apartment price have edged up yet again, to a new record of $1.54 million you missed the boat Steve.

Fire Island is down. You are owning where you should be renting and renting where you should be owning.

How does inputed rent calculate to make your obvious error correct?

Or answer this: you have two mortgages. You pay $1,000 in interest on both. One you deduct at the 26% rate, the other at the 33% rate.

Why would one mortgage be given better treatment than the other? Shouldn't they both be treated at their effective rate?

evillager - I will have to disagree with you. Steve says he is worth about $2 million. In my world that is chump change, but renting for $4200 month is about right with that little coin.

I could say the same for you. Owning a place that is worth $1.3 milllion is chump change too.

evillager - $1.3 gets you about 900 sq ft in the village. Thats not a mansion. That is smaller than my parking space.

Petrfirz, what are you disagreeing with? He's the one that said he made a "small fortune" and is such a real estate expert. Small fortune and $4200/month rental don't exactly go together in my book.

And of course owning a place worth $1.3 m is chump change in this city...but I'm only 30, and I don't purport to be a real estate expert or tell everyone else what dumb decisions they make.

I am glad for you all!

Especially if you want to pay $1.3 million for 900 square feet because you absolutely, positively must live in the East Village.

hey petrfitz, where did evillager say that he owned a mansion, or that 4200 was a lot for rent (he actually was saying the opposite)?

2 really stupid obnoxious posts and the only thing you said on point was wrong (ie that 4200 was about right for 2 mil net worth).

petrfitz:

"Steve says he is worth about $2 million. In my world that is chump change, but renting for $4200 month is about right with that little coin.

I could say the same for you. Owning a place that is worth $1.3 milllion is chump change too."

Oh yeah?!?!?!? Well, my daddy has a bigger d*ck that yours!!!

Can we get out of elementary school mode already please? While we are all delighted to know that you are wealthy, that's not what this board is about.

Otherwise, it wouldn't be the Street Easy board, but the "My d*ck is bigger than yours-Elementary School Style" board.

steve, you are making up your own incomprehensible example that makes no sense to justify your failed opinion. Just look over the other thread, it is pretty clear that you have no clue what you are talking about.

steve also has claimed to make 60% annualized long-term returns on his stock portfolio. I don't want to use the name Pinocchio, but I just did . . .

evillager - exactly. so, when did you make your small fortune in NYC steve? or was it more in the form of REITS? tell us...

"steve, you are making up your own incomprehensible example that makes no sense to justify your failed opinion."

If you think the example is incomprehensible, that explains a lot.

Let me try to make it easier. You have two mortgages taken out at the exact same time for the exact same amount at the exact same interest rate. The first mortgage is deducted at your 26% marginal rate because you don't make enough to deduct both at the 33% marginal rate. The second is deducted at the 33% rate.

Which mortgage is more valuable taxwise?

MMAfia- this is a board that discusses making money from real estate. Shouldnt we listen to those who have actually made money?

Steve lives in a rental and owns a $500K property. He argues that he knows trends and RE investing better than anyone. His portfolio is pretty meager.

MMafia you also agree with Steve alot and bash others who disagree with him. What is your success and portfolio means that we should listen to you?

I am in my late 30's own several buildings in Manhattan, properties in Vegas, and along the shore on the East Coast. I live in a property valued at over $5 million with $320K outstanding on my mortgage.

You and Steve repeatedly argue that people like me are idiots and we are going ot lose our shirts. I would like to know what you base your comments on and if you have any accomplishments that back up your strong language?

It's very pleasing to me how people are so worried about my finances.

no Steve you talk down to people and bash their strategies, predict their demise. You have a pretty meager net worth, not a huge history of actually making money on real estate. That is why we are discussing your finances.

You are like a monday morning quarterback, trying to criticize those who actually play and have real money in the game.

"I didn't buy it to rent it, and I have no plans to. I also have no plans to sell it."

Whoa! steve, what happens when your place in Fire Island loses 40-50% in value in the next 12 months and your 5/1 ARM resets? You may want to refinance now while you are still (slightly) above water. Man, things are going to get ugly for you.

Anyone thinking about buying in Fire Island should watch out. My advice would be to wait for a year and you will be able to buy for half the price.

"I am in my late 30's own several buildings in Manhattan, properties in Vegas, and along the shore on the East Coast. I live in a property valued at over $5 million with $320K outstanding on my mortgage."

Yawn.

But how's that property in Vegas doing?

"He argues that he knows trends and RE investing better than anyone."

Never did. You just don't like what I'm saying.

"I live in a property valued at over $5 million."

Today.

Nonetheless: Yawn.

petrfitz, it seems very plain to me that you derive most of your opinion of yourself based on how much money you have. There are other things in life.

Steve are not your entire posts based upon you stating that you know how to make more/better money in real estate investing than the rest of us?

the vegas property is doing well - i bought in November for $1.4. the property was valued at $2.0 6 months previously. Also Steve "I didn't buy it to rent it, and I have no plans to. I also have no plans to sell it."

"Steve are not your entire posts based upon you stating that you know how to make more/better money in real estate investing than the rest of us?"

No. I've never, ever discussed investment real estate, about which I know nothing. I only ever discuss owner-occupied real estate, about which I know something.

How's that property in Vegas doing?

hey petrfitz, if you're such a big shot, why are you even on here? I would think you have better things to do. I doubt you are getting advice on these boards.

many of these discussions used to be about navigating the process of buying (or even renting) in manhattan. this is what I used them for when I was in the process of looking for and ultimately buying my 1st place.

of course, it has since devolved into a lot of shouting back and forth (the market is going up! the market is going down! you're an idiot!), led by steve. and yet when I call out steve for making one of his outlandish statements (in this case, that he has made a "small fortune" in real estate), you decide to turn around and attack me?

I mean, what's your point? You seem like a big dork, no matter how much money you have. Glad you have the place in Vegas, because you probably have to pay to get laid and at least you won't be "spitzer-ed" out there.

one other point. steve can actually be pretty helpful sometimes - I note there was some thread where someone had problems with a super taking over common area in his building and didn't know what to do about it. he had some very good advice. I just wish he wouldn't make over the top comments and post 10,000 times that he thinks real estate is overpriced - we get it already.

Steve my vegas property was bought at a discount at the bottom of the market. It is an estate in an uber wealthy community.

Hows tht peice of crap condo doing in Fire Island?

Petrfitz, Stevejhx posts are interesting and informative and occasionally right and occassionally wrong. You're "I've lots of RE" post does not demonstate any ability on your part just good fortune to being in the right place over the last number of years or the beneficiary of generous parents. Anyone with a pulse could make money over the last few years.

In the interesting times ahead, real ability in RE investment will need to be required by people. Otherwise the easiest way to become a millionaire in property will be to start as a multi millionaire.

You mention the mortgage on your home at 320k but dont mention how leveraged and exposed you are on our other properties or the quality of the locations of the properties and the tenants.

What's the use having a $320k mortgage on a $5M property?

My parents had nothing to do with my success. They are retirees of modest wealth.

My leverage came from starting up and selling new media companies. I created my own leverage.

My outstanding debt on all properties is under $750K total on about $8-9 million in RE equity.

Evillager - I am on these boards because I am selling a Manhattan property and will need to make a $4 million 1031 flip in the next 6 months. I am looking for info on the market. In regard to having to pay to get laid, my wife is much younger than me and a fomrer actress/model.

Steve is never helpful he takes a peice of logic and misapplies it. He makes people think he knows what he is doing and he doesnt. He is giving advice when he is unqualified.

Would you take stock advice from someone who owns less stock than you?

"Stevejhx posts are interesting and informative and occasionally right and occassionally wrong"

That comment by Shamrock is the most disturbing one in this thread.

petrfitz, I think I saw your wife out last night...she left the bar with 2 different guys. What's up with that?

thats always been my issue with steve too. even if he has knowledge about owning real estate as a non-invesment, he doesn't own now and never brings new info to the table. it's always renting is 2x times cheaper to rent. great. ok. it's 2x cheaper to rent. you won't buy intil the ratio is more in line. ok, o, carry on renting. and jump back on when you have something new to say.

why have debt when you dont need it? I have enough debt on my properties that are in line with the income from those properties.

I may leverage more in real estate but have other priorities at this time (i.e impending birth of a another child)

"a lot of shouting back and forth (the market is going up! the market is going down! you're an idiot!), led by steve."

What about spunky?

petrfitz, the purpose in life is to be happy, not to be wealthy. Many years ago I quit a high paying job with Price Waterhouse because I hated it, and I am now doing something that I enjoy, albeit making less money than I otherwise would be making had I stayed put.

I enjoy my co-op on Fire Island. It's what I want to do. I work at home so it's a nice way to get out of the city on weekends for 6 months out of the year. I don't care how much it's worth - I'm neither selling nor renting it, and I can afford to pay off the mortgage if I wanted to.

Nor do I care that I rent the place that I currently live in as opposed to owning it, nor do I compare myself to Warren Buffett or Bill Gates. The fact is that I'm in the top 1% of the country in income and assets and - sometimes - happiness. That's good enough for me.

"It is an estate in an uber wealthy community."

Yawn.

Also, hilarous "former actress/model" comment...only a complete douchebag would say that and think it's impressive

evillager AKA chump change - stupid comment on my wife. Thought you had more brains than to have to go there. Previously I thought you somewhat mature and intelligent.

whatever big shot, I'm just stooping to your level. hope you have a prenup, or in the next 5 years I bet a significant portion of your RE holdings will be owned by your model/actress ex-wife who is bored with your sorry ass

"to make a $4 million 1031 flip in the next 6 months."

Aah, so you didn't pay any tax yet on your investments. Therein lies the difference between our net worths: I paid taxes on mine.

Your net worth is nowhere near you think it is.

'hilarous "former actress/model" comment...only a complete douchebag would say that and think it's impressive'

not hilarious, evillager, when you view life as a thing.

steve--i seem to recall you touting your date with a 25 year old?

Finally, a thread worth reading......

I did mention that I was going out with a 25-year old, but what a waste of time that was.

And I enjoyed it as I made it, as well.

How did petrfitz's "properties in Vegas" morph into "my vegas property"?

So what might "own several buildings in Manhattan" really mean?

Can you give us the addresses, petrfitz?

LICC: You have two mortgages taken out at the exact same time for the exact same amount at the exact same interest rate. The first mortgage is deducted at your 26% marginal rate because you don't make enough to deduct both at the 33% marginal rate. The second is deducted at the 33% rate.

Which mortgage is more valuable taxwise?

Its another Steve event and I am getting sick of it I'm right you are wrong like little kids.Since joining this site I think 60-70% of the threads are about Steve.

isn't that amazing, zorter? And I didn't even start it.

Guess I'm going to be the next "Marcia, Marcia, Marcia."

"Stevejhx posts are interesting and informative and occasionally right and occassionally wrong"
That comment by Shamrock is the most disturbing one in this thread.

- I thought that comment might get a reaction ! Maybe I should have said "occasionally wrong and occassionally very wrong" !!

And Stee surely by using a 1031 flip, petrfitz is reinvesting gross now so his investment is more now even if eventually tax is payable ?

evillager - my wife has a trust fund that is worth more than me. No need for a pre-nup. Also ?I havent touched any of her money to make mine.

Steve - I did deduct taxes from my net worth hence my use of the word "equity"

Its amazing how quickly Steve, and evillager regressed to children having to attack my wife.

Steve I wont give you the addresses for sake of keeping my holding company info private but most are in CB3 - LES and East Village.

LICC, since you don't seem to be able to answer my easier question, let me make it easier still:

You have one mortgage. Half of it is deducted at the 26% marginal tax rate, the other half at the 33% marginal tax rate.

Why when you do your calculations do you insist on deducting it all at your marginal rate, when you're really only getting the benefit of the effective rate?

Obviously that question has no logical answer, which is why all deductions must be valued at their effective rate. Deductions are fungible. (Look that up.)

"Steve, and evillager regressed to children having to attack my wife."

I never once said anything about your wife. You'll need to apologize for that.

"equity" in what sense? What you think you could get for it if you tried to sell it today (less the deferred taxes, that is)? That's not equity. It's paper.

Being the savvy real-estate investor that you are, you should know that you cannot revalue real estate on your balance sheet; it must be depreciated. What's on your balance sheet is your equity. Everything else is fantasy.

Shamrock - Steve is also unaware that you can 1031 then turn into a principle residence (under the right conditions) then take the $500K exemption minimzing your long term tax burden.

Steve - the $4million is selling the property today. Contracts are signed deal is under way. No decrease in value. You are wrong that RE market is tanking.

After this deal, I have another 2 properties sitting in CB3 that are about to be rezoned. My buildable FAR will double overnight; so will the sales price. I stand to make a few million on those properties.

Another data point against your "argument" that RE market is tanking.

'hilarous "former actress/model" comment...only a complete douchebag would say that and think it's impressive'

so, you're a bit of a douchebag too, then? because you were excited when you posted it. i believe your comment was is anyone else excited abot my date with a 25 yr old?

Stee only a douchebag would be so envious of a guy who is married to a model that he calls him a douchebag.

Why am I a douchebag to be proud of my wife's carreer?

1031 only if you rent it out for 2 years and live in it for 2 years, and don't put it up for sale while you rent it out.

"because you were excited when you posted it."

actually, no. I had just come back from a bar, and was drunk.

"Why am I a douchebag to be proud of my wife's carreer?"

First I didn't make the comment, only commented upon it. The way you wrote it, coming completely out of the blue, makes it sound like objectification.

"only a douchebag would be so envious of a guy who is married to a model that he calls him a douchebag."

Me envious of you having married a model. Not only unlikely: impossible.

"so, you're a bit of a douchebag too, then?"

eah, really now. Do you even need to ask that question? steve's college nickname was Massengill.

I will say I enjoyed your clever post, JuiceMan. I know very little about the products, however.

In fact, nothing.

Um, proud of her career? Are you kidding me? Was she on a billboard, on the cover of vogue? Didn't think so.

The "actress/model" comment is laughable because that is what every halfway pretty girl who has neither talent nor education yet is trying to "make it" in nyc calls herself

Also, every troll-looking semi-rich guy in manhattan seems to then seek out the wounded gazelles from the actress/model crowd - you know, the ones not quite pretty, skinny or talented enough - and then tries to scoop them up when they are one months' rent away from dancing at Scores

If you want more information, just stop by the workout room in the basement of 190 east 7th street and talk to the girls there.

So yes, I think you are a douche talking about having a "former acrtess/model" for a wife, and you also are an a-hole for attacking me out of the blue on this board. So go f yourself.

boys, boys, boys!

This thread is supposed to be about me. Don't hijack it!

steve, it is amazing how you need this type of explanation. Deductions work to reduce your taxable income. Your marginal rate is the rate applied to the last dollar of income that is taxed. If you are looking at the value of your deduction, you have to look at the rate that would apply to those dollars of income if they were not deducted. Using your marginal rate will always be more accurate than using your effective rate, which by definition will always be lower. Boy you are a slow thinker.

I'm a "slow thinker"?

"If you are looking at the value of your deduction, you have to look at the rate that would apply to those dollars of income if they were not deducted."

So deductions made in January are worth less than deductions made in December, since you get a bigger deduction the more money you make?

Once you get done answering that question, answer this one:

You have one mortgage. Half of it is deducted at the 26% marginal tax rate, the other half at the 33% marginal tax rate.

What rate is the mortgage deducted at?

And since you didn't bother to look it up:

fungible (n) adjective Law (of goods contracted for without an individual specimen being specified) replaceable by another identical item; mutually interchangeable.

All deductions are mutually interchangeable: margin interest is interchangeable with mortgage interest. If you deduct mortgage interest first and margin interest second, then margin interest is worth more.

Right?

If, LICC, according to your logic, deductions made in January are worth less than deductions made in December, since you get a bigger deduction the more money you make - which is what you said - then to find out what the net effect of those deductions over time is would mean that you would average them, meaning you would wind up with the...

EFFECTIVE RATE!

I don't think Steve has any long term intentions. I think his intentions are all short-term - feel better about himself, make others feel worse, attract attention, have something to distract himself from his other tedium, attract more attention.

Other than that, reaper in this discussion actually seems like the biggest jackass, notwithstanding the pissing match between between petrfitz and evillager.

Separately, I postulate - with gas prices up, commuting prices up, and home heating and electric prices up, NYC's real estate prices may benefit.

steve - maybe you should look up "marginal." The same person can't have two marginal rates. You really do have comprehension problems.

"The same person can't have two marginal rates."

Oh, LICC, you were worried about your relatives not getting into Columbia, my alma mater!

http://www.investopedia.com/terms/m/marginaltaxrate.asp

But I'll save you the click: "Marginal Tax Rate: The amount of tax paid on an additional dollar of income. As income rises, so does the tax rate.

The marginal tax rate is what you pay on the margin - every next dollar. These are the current tax rates for single taxpayers, ignoring AMT:

$0 - $7,825 - 10%
$7,825 - $31,850 - 15%
$31,850 - $77,100 - 25%
$77,100 - $160,850 - 28%
$160,850 - $349,700 - 33%
$349,700 - 35%

Just so you know how it works, if you made $31,850 last year, you would pay 10% on the amount up to $7,825, then 15% on the amount from $7,825 to $31,850. I was in the 35% tax bracket last year, so every dollar I made above $349,700 was taxed at 35%.

But the first $7,825 was taxed at 10%.

What a person can't have is two EFFECTIVE tax rates, because the effective tax rate is the average of all the marginal rates.

"steve, you're contention that you must use your effective tax rate when estimating the benefit of the tax deduction of mortgage interest rather than the marginal tax rate was ludicrous, and not credible."

I think you should stop posting here for a very long time to come - out of embarrassment if for no other reason. And divvie, as well.

"Yet, you still either are too confused to understand or too dense to admit when you are foolishly wrong."

Right back atcha!

VVerain, you left yourself out of your pop psych analysis.

steve, it is amazing how much you embarass yourself. Your marginal rate is the rate paid on the last dollar of income. True, a person has only one effective rate as well, but that doesn't change the fact that you must look at your marginal rate when determining your mortgage deduction benefit. At least you are blissful in your ignorance.
Now I can see why there are many more Wharton grads in finance than Columbia alum.

"True, a person has only one effective rate as well"

"As well"?

No - a person has one effective tax rate, but most people (those who make more than $7,825 per year) have multiple marginal rates. You initially said - and everything you've ever written supports that this is what you think - "The same person can't have two marginal rates."

Nonsense.

"you must look at your marginal rate when determining your mortgage deduction benefit."

Why?

If you can answer why, then you can answer:

You have one mortgage. Half of it is deducted at the 26% marginal tax rate, the other half at the 33% marginal tax rate.

What rate is the mortgage deducted at?

Which disproves "you must look at your marginal rate when determining your mortgage deduction benefit."

Sheesh steve. This is now starting to remind me of your thread where you tried to blast verain about leverage and enterprise value...in other words, you sound like you have no idea what you are talking about.

LICC, in Columbia's defense, I don't think Steve went to Columbia Business School (since he said he went there for undergrad). And since I went to Penn for undergrad, I can assure you there are plenty of jackasses there too. Only reason there are more Whartonites in finance is because 1) it's bigger and 2) they have both grad and undergrad business schools.

Steve went to George Washington University for undergrad. He went to Columbia for a non-professional Masters of Arts degree which is worth less than a one day ride Metrocard.

vverain, 1) GWU is true; 2) Columbia is true in that I have a Masters of Arts degree, though not a "nonprofessional" one, whatever that means. I also have a graduate certificate in creative writing from Columbia.

If your point is that I don't have an MBA, you are correct, and I never wanted one. Nor did I ever want an MA or MS in Economics. My BA is fine by me.

But none of that takes anything away from what I am saying regarding using the effective tax rate rather than marginal tax rate when ascertaining the benefit of a tax deduction, since for the most part all deductions are created equal.

evillager, I do believe it was you who made the outlandish statement that corporate incomes are constrained by GDP growth when, in fact, they are a part of GDP growth. I believe you also said that because you had met billionaires, their savvy had rubbed off on you.

And I believe vverain tried to convince us that real estate is not a leveraged investment whereas corporate balance sheets are by definition leveraged, when real estate is highly leveraged, and he was comparing gearing - which produces income - to mortgages, which produce debt.

Which analysis is worth less than a one day ride Metrocard.

Unless it allows you to answer:

You have one mortgage. Half of it is deducted at the 26% marginal tax rate, the other half at the 33% marginal tax rate.

What rate is the mortgage deducted at?

I'll give you a hint. The effective rate.

Please Steve, using terms you don't even understand. I worked for the Brits in the past - they call things gearing. Not a single U.S. investor, banker, or corporate treasurer or CFO uses the term gearing.

Leverage. I said that equities are a levered instrument, because they represent the present value of the ownership of cash flows of the corporation after debt holders are paid off.

I said you can't compare equity returns with the value of appreciation of real estate because equity returns are levered (see above) - an appropriate comparison would be based on a view of the the aggregate value of corporations (that aggregate value being the equity values (levered) plus the debt) compared to the value of aggregate real estate. ... you went on to go search Wikipedia for information which you misinterpreted and didn't have the tools to understand. And then further confused yourself, called names, continued to assert your nonsense, and more.

Real estate isn't levered. You may buy real estate and use leverage, and most people do, but your initial comparison was on the growth of the equity markets (i.e. a rough average of the aggregation of individual equity values) vs. the appreciation of real estate, not vs. the growth of the equity markets vs. the _returns_ on investment in real estate.

Marginal rates, effective rates - I haven't paid attention thus far. The answer seems simple. 50% * 26% + 50% * 33% or 29.5%. How is it Steve that you can have a debate over that?

ps - the irony of you holding a graduate certificate in creative writing is not lost on the readers of this site.

Please Steve, using terms you don't even understand. I worked for the Brits in the past: they use the term gearing to reflect the use of debt on the balance sheet. Not a single U.S. investor, banker, or corporate treasurer or CFO uses the term gearing.

Leverage. I said that equities are a levered instrument, because they represent the present value of the ownership of cash flows of the corporation after debt holders are paid off.

I said you can't compare equity returns with the value of appreciation of real estate because equity returns are levered (see above): an appropriate comparison would be based on a view of the the aggregate value of corporations (that aggregate value being the equity values (levered) plus the debt) compared to the value of aggregate real estate. ... you went on to go search Wikipedia for information which you misinterpreted and didn't have the tools to understand. And then further confused yourself, called names, continued to assert your nonsense, and more.

Real estate isn't levered. You may buy real estate and use leverage, and most people do, but your initial comparison was on the growth of the equity markets (i.e. a rough average of the aggregation of individual equity values) vs. the appreciation of real estate, not: the growth of the equity markets vs. the _returns_ on investment in real estate.

Marginal rates, effective rates: I haven't paid attention thus far. The answer seems simple. 50% * 26% + 50% * 33% or 29.5%. How is it Steve that you can have a debate over that?

ps: the irony of you holding a graduate certificate in creative writing is not lost on the readers of this site.