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Me buying a home will not make things right. Second, if I'll buy a house, it will be a cash only deal. All I want "an equal protection" under handout laws.
Ok. Here is the optimization path.
Lease it as business lease, with option to buy, rental payments applying. (business lease expense, every year, plus deprecation).
Once clear, Title it in 3rd party.
Sell and partly Give it to a non-profit. (deduct contribution, and your 3rd party maintains an interest).
Your non-profit which now "owns and operates" the site and provides you housing as part of your tax-exempt compensation for operating the non-profit. (goes off the property tax roles).
So all payment and expenses have been taken as pre-tax expenses, and you no longer pay property taxes.
In some states you can claim homestead if you rent. The property has to qualify and you can claim it on state taxes. Check into it. Some people are not aware it exists in their county.
Its very likely in the future tax reform that all such deduction will be eliminated and taxed by compaensation total only. One form in senate fiance commiteee is one page and 29 lines . The rates are lower to compensated for the closing of loophole deductions.
Home sale gains are not taxable by Federal Government. It doesn't sound right either. If federal government subsidizes your mortgage, should it have a small piece of a pie also?
If this is the case one should be able to deduct a loss too... ouchie for government over the past few years.
Because the guys writing laws do not work for the poor....
This is an example of someone who blindly supports "tax simplification" without ever stopping to ask about the real public policies that exist for some tax deductions.
I won't be blind or dishonest about this one. The deduction favors property owners over renters. Since property owners generally have higher incomes than renters it is more of a benefit for wealthier people than poorer people. The problem is that wealth isn't the only public policy that is important in determining the contours of a tax system.
Whenever someone complains about the mortgage interest deduction, the first question I always have for them is what has your experience been as a renter and with rental property? My experiences were very illuminating. In short, what I generally saw was a pattern where renters typically felt no incentive to put anything into their property at all. There is a great percentage of rental property in the USA that is badly neglected. It didn't start that way. It largely ended up that way because of ordinary "wear and tear" that neither landlords, nor tenants felt a compulsion to fix. I'm referring to broken windows that get taped rather than replaced. I'm referring to light fixtures in which no one bothers to replace bulbs. I'm referring to peeling paint on walls that no one paints over. Sometimes furnaces don't get fixed leading to dangerous situations that can involve carbon monoxide poisoning or accidents.
Property that is owned is not always better cared for than rental property. However, the pattern I've observed over my fifty year life is that it is generally much better cared for. That simple reason can be characterized in one sentence. Its called "pride of ownership". I believe the state and the public do have an interest in seeing that property is kept in some kind of a safe and manageable condition. I believe that we also have an interest in encouraging people to take pride in their homes and stay in one place longer. That's the sort of thing that helps build communities. It makes communities more than simply a place where people sleep at night.
Finally, the deduction encourages new home construction and this puts construction workers and realtors to work.
Go ahead and try to get this deduction repealed. You'll be met by hundreds of powerful lobbyists for real estate companies and the home construction industry. They'll oppose you and I will too. Rightfully so, because tax simplification is continuously overstated as a value in society.
Simple question. Why one can deduct mortgage interest from their taxes and why I can't deduct my rent? Who made this decision and when? Why? Is there any basis in Adam Smith, Karl Marx, Keynes, Bible... for this housing discrimination? Why the ones who pay for their house with cash are also penalized by the government? They don't work for their house as hard as the mortgage paying crowd?
Naturally, the larger your mortgage the more deductions you have. I'm guessing that lion's share of mortgage deductions is claimed by very financially blessed individuals who could very well survive without this government handout for the rich home owners & bankers. Actually, many of them could pay for their homes upfront with cash if not for "government incentives". If there is a "breaking point" above which it is financially advantageous to take a loan out for purchase rather than to pay with cash, there is something rotten in Denmark. The idea is to cut interest on mortgage to minimum (using tax breaks) and to invest $ at market rates elsewhere, all the budget deficits be damned. Obviously, low wage mortgage payers don't "squeeze" nearly as much $ from their tax breaks as top 10%. The question is, why renters and savers like me should subsidize gated community dwellers?
From what I know many businesses prefer to lease equipment instead of owning because of the massive tax loopholes government offers. Some companies setup fictional in the truth and real&legal as far as IRS is concerned LLCs that buy and "lease" equipment to the "mother" corporation. If this is profitable, what is the "public" benefit of it all?
i rent and i don't like this deduction, either. it doesn't seem logical to give tax subsidies for having a mortgage.
however, it is our entire tax code that is screwed up, not just this deduction.
simple...because your landlord is deducting the mortgage interest on the property. The same thing cannot be deducted twice!
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