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And importantly, only enjoyed by homeowners who got the mortgage before the benefit of the tax deduction started getting capitalized into the value of the house
by bufordsharkley 10y ago
And importantly, only enjoyed by homeowners who got the mortgage before the benefit of the tax deduction started getting capitalized into the value of the house.
- quadrangle 10y agowait, what? There's a $250k capital gains exemption for sale of primary home lived in 2 of past 5 years, so isn't capital gain basically irrelevant to anyone but very wealthy? Do you know something I don't? (reasonably likely)
- drewgross 10y agoWhat he means is that the deduction has been "priced in" to the price of homes/mortgages. In a similar story, a company I used to work for once offered employees a $x incentive to live close to the office. They then found that the price of homes in the area immediately went up by $x.
- quadrangle 10y agoGot it, of course! Capitalized could be a formal tax term in this case, but it was just meant in terms of actual plain capitalization generally. Yeah, mortgage tax deduction, like all incentives that encourage borrowing more money, ends up being a transfer of wealth from new homebuyers to whoever had owned property outright (whether older long-term homeowners or developers or real estate investors). Very important point.