4 ms·

They really undersold it. 800$ per day is what it earns in appreciation, but it earns even more when you rent it out. If you have a house on the penninsula, I

They really undersold it. 800$ per day is what it earns in appreciation, but it earns even more when you rent it out. If you have a house on the penninsula, I'd say it's time to cash out and move to the midwest and retire. ;)

tehlike 8y ago
Dont forget tax benefits.
- toast0 8y ago
  You can pretty much forget about tax benefits, thanks to the 2017 federal tax plan that limits deductability of state and local taxes and reduces the cap on mortgage interest deductability. You may still get a deduction, but it's not going to be that much higher than the standard deduction.
  - sokoloff 8y ago
    For landlords, those new limits do not apply; they remain deductible, just like other qualified business expenses (which makes sense IMO, which is why I support the mortgage interest deduction, to keep owner occupants on relatively equal footing with landlords when contemplating purchasing property).
    - tehlike 8y ago
      The real q is, why does government even subsidizing home ownership in the first place?
      - sokoloff 8y ago
        US business taxes are based income / profits. In order to do that, it's required to allow profit-seeking entities to deduct business expenses (such as raw materials, wages, etc.). Logically, interest and property taxes are business expenses for landlords, just as steel and electricity are business expenses for Ford. Then, there's a question of whether you want to have a level purchasing environment for prospective owner-occupants when they are bidding against a prospective landlord. (I believe that we do want to encourage owner-occupancy, at least to the extent that they are on equal footing with landlords.) Repealing the OO-MID (owner-occupied mortgage interest deduction) would mean that a landlord could literally pay more for a property than an owner-occupant and achieve the same long-run financial outcome, or pay the same and achieve a better outcome. This would amount to a subsidy to renters over owners. Providing a similar (now lessened) subsidy to owners serves to level, not tilt the playing field. If one believes that a nation of entirely renters is preferable or indifferent as compared to a mix of landlords and end users, then there is no valid purpose for the OO-MID. I believe there are community and public benefits to owner-occupancy and support the level playing field.
        tehlike 8y ago
        500k capital gains tax free income doesnt fit that. Why does a stock not have this exclusion, but a home ownership does? I get government incentives overall. I am just pointing to some reasons bubbles form.
        sokoloff 8y ago
        That’s a fair question. I don’t support that exclusion, even though I stand to benefit the full amount if we were to sell today. (Obviously, if we sell, we’re taking the exemption, but I agree it’s bad policy.)
      - youpassbutter 8y ago
        >The real q is, why does government even subsidizing home ownership in the first place? Firstly, older people own homes and they vote. Secondly, homes are a significant part of people's retirement assets. As companies do away with pensions and as the Social Security age gets increased, home values gain in importance. So the government has an incentive to keep home prices high. This hurts the younger generation looking to buy homes and raise a family. But the older generation votes in greater numbers than the younger people. If you are politician running for office, you aren't going to say "lets raise property taxes" or "lets get housing prices down so that young people can afford it".
        tehlike 8y ago
        It also causes nimby. You own a house you vote in your best interest and oppose new housing. Prop 13 is one big reasons, too.

tehlike 8y ago

Dont forget tax benefits.

toast0 8y ago
You can pretty much forget about tax benefits, thanks to the 2017 federal tax plan that limits deductability of state and local taxes and reduces the cap on mortgage interest deductability. You may still get a deduction, but it's not going to be that much higher than the standard deduction.
- sokoloff 8y ago
  For landlords, those new limits do not apply; they remain deductible, just like other qualified business expenses (which makes sense IMO, which is why I support the mortgage interest deduction, to keep owner occupants on relatively equal footing with landlords when contemplating purchasing property).
  - tehlike 8y ago
    The real q is, why does government even subsidizing home ownership in the first place?
    - sokoloff 8y ago
      US business taxes are based income / profits. In order to do that, it's required to allow profit-seeking entities to deduct business expenses (such as raw materials, wages, etc.). Logically, interest and property taxes are business expenses for landlords, just as steel and electricity are business expenses for Ford. Then, there's a question of whether you want to have a level purchasing environment for prospective owner-occupants when they are bidding against a prospective landlord. (I believe that we do want to encourage owner-occupancy, at least to the extent that they are on equal footing with landlords.) Repealing the OO-MID (owner-occupied mortgage interest deduction) would mean that a landlord could literally pay more for a property than an owner-occupant and achieve the same long-run financial outcome, or pay the same and achieve a better outcome. This would amount to a subsidy to renters over owners. Providing a similar (now lessened) subsidy to owners serves to level, not tilt the playing field. If one believes that a nation of entirely renters is preferable or indifferent as compared to a mix of landlords and end users, then there is no valid purpose for the OO-MID. I believe there are community and public benefits to owner-occupancy and support the level playing field.
      - tehlike 8y ago
        500k capital gains tax free income doesnt fit that. Why does a stock not have this exclusion, but a home ownership does? I get government incentives overall. I am just pointing to some reasons bubbles form.
        sokoloff 8y ago
        That’s a fair question. I don’t support that exclusion, even though I stand to benefit the full amount if we were to sell today. (Obviously, if we sell, we’re taking the exemption, but I agree it’s bad policy.)
    - youpassbutter 8y ago
      >The real q is, why does government even subsidizing home ownership in the first place? Firstly, older people own homes and they vote. Secondly, homes are a significant part of people's retirement assets. As companies do away with pensions and as the Social Security age gets increased, home values gain in importance. So the government has an incentive to keep home prices high. This hurts the younger generation looking to buy homes and raise a family. But the older generation votes in greater numbers than the younger people. If you are politician running for office, you aren't going to say "lets raise property taxes" or "lets get housing prices down so that young people can afford it".
      - tehlike 8y ago
        It also causes nimby. You own a house you vote in your best interest and oppose new housing. Prop 13 is one big reasons, too.