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The upcoming changes in the tax code certainly did not help the housing market: - The new SALT cap is extremely low, particularly if you own a home in the Bay

The upcoming changes in the tax code certainly did not help the housing market: - The new SALT cap is extremely low, particularly if you own a home in the Bay Area. 10K! Mitigative solution: Stay put and keep current tax base, hampering both supply and demand (for a nicer home) - The doubled standard deduction made owning with a mortgage less attractive (But a win overall once your loan is paid off enough). - Mortgage interest deduction lowered from 1M to 750K (I believe it's 1/2 if you're buying alone). Houses are so expensive here this actually matters. On the supply side: More post-tax money + higher interest rates means those who locked into great rates won't want to sell, or want to buy a more expensive home. On the demand side: All of the above means everything just got even more expensive. EDIT: Regardless of what your stance is on mortgage interest deductions, there's no doubt that the upcoming tax code changes threw cold water onto the housing market. This wouldn't be such an issue if there was more supply in the first place, but here we are.

jeffbax 8y ago
This is all true, but the mortgage interest deduction should be $0, particularly in the rich cities that refuse to let enough homes get built and fix things like zoning. It's an awful distortion that's a handout to the wealthy to the penalty of renters (generally less well off)
- aceon48 8y ago
  It also encourages debt and is effectively a subsidy to banks
  - AnthonyMouse 8y ago
    > It also encourages debt and is effectively a subsidy to banks I have no idea who is downvoting you. That's absolutely correct. If they really wanted to subsidize ownership they would make it tax deductible to pay down principal. (And then give you zero tax basis so it's all taxable income when you sell, and cap the maximum sunk deduction per person at the median home value so rich people don't buy twelve houses to avoid their taxes.)
- astura 8y ago
  I'm a homeowner and I think it's an absolute crime my mortgage interest is tax deductible yet rent isn't. If we believe, at a philosophical level, that interest payments should be tax deductible, ok, then make ALL interest paid tax deductible - credit cards, personal loans, auto loans, payday loans, etc. It's shameful. That being said, with the new tax bill, 90+% of both owners and renters will be taking the standard deduction this year. It is my opinion that's a good thing, it's my opinion the standard deduction should truly be standard. However, moving all the middle and upper middle class into taking standard deduction makes the mortgage interest deduction basically exclusively for the very wealthy.
  - kevin_thibedeau 8y ago
    Some states do permit tax deductions for rent. Indiana, New Jersey, and possibly others.
    - astura 8y ago
      Looked into this real quick. The maximum rental deduction in Indiana is capped at $3,000 and the income tax rate is a flat 3.23%. So a renter in Indiana only pays $97 less in taxes.
    - klipt 8y ago
      California has a (very small) tax credit for renters.
      - s73v3r_ 8y ago
        I believe it's only for lower income renters.
  - orangecat 8y ago
    If we believe, at a philosophical level, that interest payments should be tax deductible, ok, then make ALL interest paid tax deductible - credit card, personal loans, auto loans, etc. Exactly. In fact all interest was deductible until the 1986 tax reform. Unfortunately the mortgage interest deduction survived due to lobbying from the real estate industry. with the new tax bill, 90+% of both owners and renters will be taking the standard deduction this year. It is my opinion that's a good thing. It's a very good thing for fairness, economic efficiency, and saving taxpayer time.
- nostromo 8y ago
  State and local taxes should also not reduce your federal taxable income at all. High tax states can tax themselves all they want to, but that shouldn’t reduce their federal tax burden.
  - scarface74 8y ago
    Why not? The high tax states are also paying more in Federal taxes than they receive. The low tax states are already subsidized by the federal government.
    - dantheman 8y ago
      The high tax states drive the federal tax policy and spending. When California and New York push large federal programs and higher federal taxes and then are able to exclude themselves from the cost it's wrong.
      - scarface74 8y ago
        How can the high tax states push policy when they mostly elect Democrats and the Republicans control Congress? The tax law that just passed was very unfriendly to blue states.
        AnthonyMouse 8y ago
        > How can the high tax states push policy when they mostly elect Democrats and the Republicans control Congress? The Republicans don't always control Congress, and the Democrats generally favor program expansions when they do have control. Moreover, even when they're not in the majority, they're still in Congress. Even though the vote was mostly along party lines, the deciding vote on the Medicare expansion under Bush was a Democratic Congressman from New York. And have a look at the parties of the Representatives from California and New York. A majority of their Representatives are Democrats but they still elect more Republicans than most states have Representatives.
    - RestlessMind 8y ago
- deleted 8y ago
  [deleted]
jakelarkin 8y ago
last years appreciation, the lost deductions, rising rates have really stretched the limits of demand. how many households are really out there who can afford a 10k/month mortgage or 300k down payment that you need for a house in upper middle class parts of Bay Area or Seattle.

jeffbax 8y ago

This is all true, but the mortgage interest deduction should be $0, particularly in the rich cities that refuse to let enough homes get built and fix things like zoning. It's an awful distortion that's a handout to the wealthy to the penalty of renters (generally less well off)

aceon48 8y ago
It also encourages debt and is effectively a subsidy to banks
- AnthonyMouse 8y ago
  > It also encourages debt and is effectively a subsidy to banks I have no idea who is downvoting you. That's absolutely correct. If they really wanted to subsidize ownership they would make it tax deductible to pay down principal. (And then give you zero tax basis so it's all taxable income when you sell, and cap the maximum sunk deduction per person at the median home value so rich people don't buy twelve houses to avoid their taxes.)
astura 8y ago
I'm a homeowner and I think it's an absolute crime my mortgage interest is tax deductible yet rent isn't. If we believe, at a philosophical level, that interest payments should be tax deductible, ok, then make ALL interest paid tax deductible - credit cards, personal loans, auto loans, payday loans, etc. It's shameful. That being said, with the new tax bill, 90+% of both owners and renters will be taking the standard deduction this year. It is my opinion that's a good thing, it's my opinion the standard deduction should truly be standard. However, moving all the middle and upper middle class into taking standard deduction makes the mortgage interest deduction basically exclusively for the very wealthy.
- kevin_thibedeau 8y ago
  Some states do permit tax deductions for rent. Indiana, New Jersey, and possibly others.
  - astura 8y ago
    Looked into this real quick. The maximum rental deduction in Indiana is capped at $3,000 and the income tax rate is a flat 3.23%. So a renter in Indiana only pays $97 less in taxes.
  - klipt 8y ago
    California has a (very small) tax credit for renters.
    - s73v3r_ 8y ago
      I believe it's only for lower income renters.
- orangecat 8y ago
  If we believe, at a philosophical level, that interest payments should be tax deductible, ok, then make ALL interest paid tax deductible - credit card, personal loans, auto loans, etc. Exactly. In fact all interest was deductible until the 1986 tax reform. Unfortunately the mortgage interest deduction survived due to lobbying from the real estate industry. with the new tax bill, 90+% of both owners and renters will be taking the standard deduction this year. It is my opinion that's a good thing. It's a very good thing for fairness, economic efficiency, and saving taxpayer time.
nostromo 8y ago
State and local taxes should also not reduce your federal taxable income at all. High tax states can tax themselves all they want to, but that shouldn’t reduce their federal tax burden.
- scarface74 8y ago
  Why not? The high tax states are also paying more in Federal taxes than they receive. The low tax states are already subsidized by the federal government.
  - dantheman 8y ago
    The high tax states drive the federal tax policy and spending. When California and New York push large federal programs and higher federal taxes and then are able to exclude themselves from the cost it's wrong.
    - scarface74 8y ago
      How can the high tax states push policy when they mostly elect Democrats and the Republicans control Congress? The tax law that just passed was very unfriendly to blue states.
      - AnthonyMouse 8y ago
        > How can the high tax states push policy when they mostly elect Democrats and the Republicans control Congress? The Republicans don't always control Congress, and the Democrats generally favor program expansions when they do have control. Moreover, even when they're not in the majority, they're still in Congress. Even though the vote was mostly along party lines, the deciding vote on the Medicare expansion under Bush was a Democratic Congressman from New York. And have a look at the parties of the Representatives from California and New York. A majority of their Representatives are Democrats but they still elect more Republicans than most states have Representatives.
  - RestlessMind 8y ago
deleted 8y ago
[deleted]

jakelarkin 8y ago

last years appreciation, the lost deductions, rising rates have really stretched the limits of demand. how many households are really out there who can afford a 10k/month mortgage or 300k down payment that you need for a house in upper middle class parts of Bay Area or Seattle.