Felix Salmon doesn’t think that the mortgage deduction really matters all that much.
The standard deduction in 2009 for a married couple filing jointly is $11,400. That means you get to subtract $11,400 from your income even if you don't pay any mortgage interest at all. Now suppose that married couple bought a home for $200,000, put 20% down, and got a 6% mortgage. Then their annual interest payments are 6% of $180,000, or $10,800. They own your own home, but they get no benefit from the tax deduction: they're still better off taking the standard deduction.
Here is the reply that I left at Asymmetrical Information:
Felix is totally and completely wrong on the mortgage interest deduction.
Mortgages are front-loaded so that for the first 1/3 of the term you are paying mostly interest. so all of those recent buyers are paying 80-90% of their payments just in interest.
Plus you add in deductions for property taxes, etc and you get a significant deduction on your taxes.
Long time owners don't see as much value, but inflation, etc mean that they make it up by keeping larger portions of their paychecks anyway.
Its easy to win an argument when you make up the facts to support your story.
No comments:
Post a Comment