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How would a renter feel if their rent increased because their landlord was unable to take a mortgage deduction? In other words, is the deduction implicitly dist

by dkresge 10y ago

How would a renter feel if their rent increased because their landlord was unable to take a mortgage deduction? In other words, is the deduction implicitly distributed pro-rata to the supporting renters via market force?

ubernostrum 10y ago
In the US, the home mortgage interest deduction does not apply to rental properties. To qualify for the deduction, you either have to use the home as your residence for a minimum period each year, or rent only part of it (and meet requirements for renting part of the home: you can't have more than two tenants, and the part of the home they live in can't have its own separate kitchen or toilet facilities).
- dkresge 10y ago
  But that's the home deduction. Apartment buildings, for example, are investment property for which mortgage interest is a deductible expense. https://www.irs.gov/publications/p527/ch01.html https://www.irs.gov/publications/p527/ch01.html
  - ubernostrum 10y ago
    Then you concede that taking away the home mortgage interest deduction (making the homeowner-who-resides-in-the-owned-home and the renter equal for tax purposes) would not drive up rents, and your original comment was at worst wrong and at best a non sequitur.
    - dkresge 10y ago
      I'm positing false equivalence. Taking away the home mortgage interest deduction would make the homeowner and renter unequal. Doing so would not drive up rents, just as eliminating the mortgage deduction on investment property wouldn't impact house prices.
      - ubernostrum 10y ago
        You said: How would a renter feel if their rent increased because their landlord was unable to take a mortgage deduction? I countered that the home mortgage interest deduction doesn't apply to rental properties. Renters and homeowners are thus currently unequal from a tax standpoint, since renters effectively pay a higher tax rate than homeowners. Removing the deduction would thus not create a new inequality; it would remedy an existing one.
        dragonwriter 10y ago
        The home mortgage interest deduction specifically doesn't, but mortgage interest on rental properties is still generally deductible. https://www.irs.gov/publications/p527/ch01.html https://www.irs.gov/publications/p527/ch01.html

by dkresge 10y ago

ubernostrum 10y ago

In the US, the home mortgage interest deduction does not apply to rental properties. To qualify for the deduction, you either have to use the home as your residence for a minimum period each year, or rent only part of it (and meet requirements for renting part of the home: you can't have more than two tenants, and the part of the home they live in can't have its own separate kitchen or toilet facilities).

dkresge 10y ago
But that's the home deduction. Apartment buildings, for example, are investment property for which mortgage interest is a deductible expense. https://www.irs.gov/publications/p527/ch01.html https://www.irs.gov/publications/p527/ch01.html
- ubernostrum 10y ago
  Then you concede that taking away the home mortgage interest deduction (making the homeowner-who-resides-in-the-owned-home and the renter equal for tax purposes) would not drive up rents, and your original comment was at worst wrong and at best a non sequitur.
  - dkresge 10y ago
    I'm positing false equivalence. Taking away the home mortgage interest deduction would make the homeowner and renter unequal. Doing so would not drive up rents, just as eliminating the mortgage deduction on investment property wouldn't impact house prices.
    - ubernostrum 10y ago
      You said: How would a renter feel if their rent increased because their landlord was unable to take a mortgage deduction? I countered that the home mortgage interest deduction doesn't apply to rental properties. Renters and homeowners are thus currently unequal from a tax standpoint, since renters effectively pay a higher tax rate than homeowners. Removing the deduction would thus not create a new inequality; it would remedy an existing one.
      - dragonwriter 10y ago
        The home mortgage interest deduction specifically doesn't, but mortgage interest on rental properties is still generally deductible. https://www.irs.gov/publications/p527/ch01.html https://www.irs.gov/publications/p527/ch01.html