11 ms·

As a home-owner not landlord (I am against the idea of owning more property than my family will use) I WISH I could write off half of my property tax.

JamesBarney 4y ago
I wish I could write off all my personal expenses as business expenses. But I understand why the laws are written such that I can't
- mindslight 4y ago
  I actually don't understand why the laws are written that way, apart from the political goal of causing W2 workers ("suckers") to bear a disproportionate tax burden. A W2 worker incurs expenses that are necessary to earn their income, including food, transportation, clothing, and healthcare. If they were able to account for these necessary expenses as a business does, the expenses would be directly deducted from income. And that's not even getting into the S-corp self-employment-tax dodge.
  - grog454 4y ago
    > If they were able to account for these necessary expenses as a business does, the expenses would be directly deducted from income. I thought that's mostly the point of the standard or itemized deduction (which businesses don't and shouldn't get).
    - mindslight 4y ago
      For one, no, those expenses aren't deductible even if you do itemize. They're considered "personal expenses" even though they were necessary to earn that W-2 income. If you buy a car and use it at least 50% to get to 1099 client(s) you can deduct that portion of it (including accelerated depreciation). But if your income is coming from W-2 job(s), you simply cannot. For two, the standard deduction is better seen as a personal exemption (which it subsumed), giving everyone a level of income that they don't have to pay tax on. Especially given that business expenses generally flow through as direct subtractions regardless of the standard deduction. There is definitely tension between allowing deductions to account for actual income fairly, and the resulting (de facto) requirement that everyone do minutiae accounting for their personal finances.
deleted 4y ago
[deleted]
rpmw 4y ago
If you take the standard deduction isn't that exactly what you are doing?
tpmoney 4y ago
Unless your property taxes are over $20K per year, you can? It's just most people don't because their standard deduction is greater than what they have records for itemizing. https://www.thebalance.com/property-tax-deduction-3192847 https://www.thebalance.com/property-tax-deduction-3192847
- kelnos 4y ago
  The link you provide points out the SALT deduction cap of $10k. With the standard deduction up to $12k+ now, if your only itemized deduction is your property and state income taxes, itemizing isn't going to be worth it. We were so close to losing the cap on SALT deductions with the Inflation Reduction Act; I'm super bummed it didn't make it into the final bill.
dexterdog 4y ago
When you are the owner/user and not the landlord you should be paying the taxes because most of the taxes are for use in the local community and most of that is schooling. The landlord gets no benefit from the majority of that stuff. The tenant does.
- PaulDavisThe1st 4y ago
  That assumes that the landlord lives in a different tax jurisdiction. Possible, certainly, but not inevitable.
  - dexterdog 4y ago
    If he lives in that jurisdiction then he is paying the taxes for the place where he is living.
    - PaulDavisThe1st 4y ago
      But also benefits from the taxes paid on the rental property that help pay for things they and their family use.
      - dexterdog 4y ago
        How does he benefit from the rental property? He doesn't live there an use the services. If he lives somewhere else in the town he pays taxes based on that. He charges rent for the other location to cover the taxes because he doesn't benefit from those taxes. The renter does.
- frumper 4y ago
  The landlord still pays property taxes on his investment properties. It’s his income tax that is offset.
  - dexterdog 4y ago
    But he passes the cost of those taxes on to the renter because the renter is the one benefiting from the schools/roads/police/fire/etc that the taxes fund.

JamesBarney 4y ago

I wish I could write off all my personal expenses as business expenses. But I understand why the laws are written such that I can't

mindslight 4y ago
I actually don't understand why the laws are written that way, apart from the political goal of causing W2 workers ("suckers") to bear a disproportionate tax burden. A W2 worker incurs expenses that are necessary to earn their income, including food, transportation, clothing, and healthcare. If they were able to account for these necessary expenses as a business does, the expenses would be directly deducted from income. And that's not even getting into the S-corp self-employment-tax dodge.
- grog454 4y ago
  > If they were able to account for these necessary expenses as a business does, the expenses would be directly deducted from income. I thought that's mostly the point of the standard or itemized deduction (which businesses don't and shouldn't get).
  - mindslight 4y ago
    For one, no, those expenses aren't deductible even if you do itemize. They're considered "personal expenses" even though they were necessary to earn that W-2 income. If you buy a car and use it at least 50% to get to 1099 client(s) you can deduct that portion of it (including accelerated depreciation). But if your income is coming from W-2 job(s), you simply cannot. For two, the standard deduction is better seen as a personal exemption (which it subsumed), giving everyone a level of income that they don't have to pay tax on. Especially given that business expenses generally flow through as direct subtractions regardless of the standard deduction. There is definitely tension between allowing deductions to account for actual income fairly, and the resulting (de facto) requirement that everyone do minutiae accounting for their personal finances.

deleted 4y ago

[deleted]

rpmw 4y ago

If you take the standard deduction isn't that exactly what you are doing?

tpmoney 4y ago

Unless your property taxes are over $20K per year, you can? It's just most people don't because their standard deduction is greater than what they have records for itemizing. https://www.thebalance.com/property-tax-deduction-3192847 https://www.thebalance.com/property-tax-deduction-3192847

kelnos 4y ago
The link you provide points out the SALT deduction cap of $10k. With the standard deduction up to $12k+ now, if your only itemized deduction is your property and state income taxes, itemizing isn't going to be worth it. We were so close to losing the cap on SALT deductions with the Inflation Reduction Act; I'm super bummed it didn't make it into the final bill.

dexterdog 4y ago

When you are the owner/user and not the landlord you should be paying the taxes because most of the taxes are for use in the local community and most of that is schooling. The landlord gets no benefit from the majority of that stuff. The tenant does.

PaulDavisThe1st 4y ago
That assumes that the landlord lives in a different tax jurisdiction. Possible, certainly, but not inevitable.
- dexterdog 4y ago
  If he lives in that jurisdiction then he is paying the taxes for the place where he is living.
  - PaulDavisThe1st 4y ago
    But also benefits from the taxes paid on the rental property that help pay for things they and their family use.
    - dexterdog 4y ago
      How does he benefit from the rental property? He doesn't live there an use the services. If he lives somewhere else in the town he pays taxes based on that. He charges rent for the other location to cover the taxes because he doesn't benefit from those taxes. The renter does.
frumper 4y ago
The landlord still pays property taxes on his investment properties. It’s his income tax that is offset.
- dexterdog 4y ago
  But he passes the cost of those taxes on to the renter because the renter is the one benefiting from the schools/roads/police/fire/etc that the taxes fund.