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Trumps proposed economic plan is going to blast so many of the benefits to owning a home since the standard deduction will be doubled[1]. It will be cheaper to
by matt_wulfeck 10y ago
Trumps proposed economic plan is going to blast so many of the benefits to owning a home since the standard deduction will be doubled[1]. It will be cheaper to rent and it will really help maximize space. Say what we will about the president but this will be a massive boon to renting nomads.
Coupled with the fact that soon state tax might not be deductible, and there may be an entire class of people who find it better to sell their home and live elsewhere.
1. https://www.donaldjtrump.com/policies/tax-plan https://www.donaldjtrump.com/policies/tax-plan
- WillPostForFood 10y agoSo that's good, right? Prices will go down and the wealth transfer from poor renters to wealthy buyers via the mortgage interest deduction will go away.
- matt_wulfeck 10y agoIt's my opinion that the Trump tax plan is good. There will be less financial incentive to owning a home or taking out a huge loan.
- greesil 10y ago1) Any hopeful homebuying millennials would also have not have the benefit of the deductions. 2) Wouldn't this just pass the cost onto renters? This seems more like a way to shift the tax burden to the middle class.
- matt_wulfeck 10y agoThe beauty of the standard deduction is that it goes unqualified to everyone. The rich itemize their taxes almost without exception. IANAA, but interest on a rental is a business expense, therefore will be be unaffected by this change.
- greesil 10y agoYou didn't actually address my first point, and you're factually incorrect on the second. Are you confused, or are you paid shill?
- matt_wulfeck 10y agoWhat's incorrect about my statements? I'm not an account so I could be wrong. From what I understand the standard deduction is unqualified for all tax filers and affects personal income returns. If a business owns a giant rental complex who will claim the personal deduction? Isn't the interest on the loan just an ordinary part of the business expense?
- sctb 10y agoPlease no personal attacks on Hacker News like this.
- hacknat 10y agoIt totally depends on the locale. I'm buying in Madison, WI right now and the pricing is so weird. I currently rent an older, not-so-nice, flat for $1605/month. Oddly enough you can get a nice 3-4 bedroom in the Madison urban area for >$350k. Assuming a 10% down payment a house for $385k (including taxes and insurance) costs the exact same amount as my flat after the mortgage interest deduction kicks in. Add to the fact that I have a fairly decent chance of recouping at least my equity and I'm paying around ~$1200/month for a much nicer place. Madison is likely an outlier as the University creates huge competition for renting, but not an inordinate amount of competition for owning. It's also not subject to arbitrage between the two markets all that much as Madison has some pretty draconian zoning policies around historic preservation that most landlords want to avoid like the plague.
- sid-kap 10y agoCan you elaborate---how is the standard deduction related to housing/mortgage interest deduction?
- matt_wulfeck 10y agoYou can either itemize or claim the standard deduction. If you're itemized deductions are higher then it's better to itemize. Mortgage interest is an itemized deduction and can be quite high, thousands of dollars of saved taxes a year, so there's incentive to owning a home and paying the mortgage. Under he proposed plan it will be much harder to beat the standard deduction, so they'll be less incentive to have mortgage interest since you likely won't be itemizing your taxes.