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cthulu2016

(10,960 posts)
5. The problem is more valuation than cash flow
Sun Sep 9, 2012, 08:02 PM
Sep 2012

eliminating the deduction decreases the value of all property, including property that has no mortgage.

The deduction represents future value that is intrinsic to all property.

And since interest rates rise and fall, the current low-rates do not negate that intrinsic value.

If you buy a house today at 4% you will still be likelier to be able to sell it down the road even if rates are 20% (like in 1980) because the intrinsic federal subsidy of the value expands along with the size of the interest component of a loan. So the market value of that property will increase more, in an inflationary period, than a comparably priced diamond or other physical investment.

Personally, I think if someone wants to cut taxes to help the economy I would return to all interest being deductible. I am not comfortable with the special status of property, but anything that can be done to reduce effective borrowing costs would be non-point as stimulus.

23.6 decades since independence from Britain. Bluenorthwest Sep 2012 #1
Thanks, I originally was going to say years and then I forgot when I went over WCGreen Sep 2012 #3
I don't have a dog in this fight, being too poor to ever qualify for a mortgage. kestrel91316 Sep 2012 #2
Thank you for this good info... CaliforniaPeggy Sep 2012 #4
The problem is more valuation than cash flow cthulu2016 Sep 2012 #5
Ru Rogh. I hope OP paid attention. lonestarnot Sep 2012 #8
I am sure wcgreen knows more about practical tax issues than I do cthulu2016 Sep 2012 #9
Of course it is based on cash flow... WCGreen Sep 2012 #17
I think we may be talking past each other cthulu2016 Sep 2012 #35
The value of the house is based on the cost of interest. WCGreen Sep 2012 #21
I know a lot of people, ohheckyeah Sep 2012 #6
It kept a roof over my head for the whole Bush administration cthulu2016 Sep 2012 #7
It's the problem with uncertainty. Igel Sep 2012 #14
It won't happen. cloudbase Sep 2012 #10
Tax the shit out of the rich 1st. Close corporate loop holes. xchrom Sep 2012 #11
amen warrior1 Sep 2012 #12
Wait a minute brush Sep 2012 #13
You got me... WCGreen Sep 2012 #16
I am serious brush Sep 2012 #22
I'm presenting facts as to why the Republicans are putting this out as a possible WCGreen Sep 2012 #23
thanks BlueToTheBone Sep 2012 #24
Thanks also brush Sep 2012 #40
I have never understood people who SheilaT Sep 2012 #15
It does two things, it puts more money into the economy because of increasing WCGreen Sep 2012 #19
Not sure I entirely follow you here. SheilaT Sep 2012 #36
Investors in real estate development like to see stability and stability in WCGreen Sep 2012 #39
And there would probably be a lot more stability if SheilaT Sep 2012 #42
But the lower the interest rates available now means more people are paying more WCGreen Sep 2012 #43
as a person without kids, mortgage deduction allowed me to itemize Liberal_in_LA Sep 2012 #32
I've been doing our own taxes for 6 or 7 years with TurboTax. The interest rate deduction mnhtnbb Sep 2012 #18
Of course it is always tied to your tax rate... WCGreen Sep 2012 #20
It's always cheaper for me to use the EZ form instead of itemizing. nt NashvilleLefty Sep 2012 #25
Were going in the wrong direction DJ13 Sep 2012 #26
if this is gonna happen, at least you have to grandfather existing mortgages. unblock Sep 2012 #27
if you... RainbowOverTexas Sep 2012 #29
Black cloud over texas RegieRocker Sep 2012 #34
I'm with you, Rainbow. SheilaT Sep 2012 #37
well then why bother with mortgages at all? just pay cash. after all, you could lose your job. unblock Sep 2012 #38
Deducting interest payments from taxes began in 1913 SOS Sep 2012 #41
Seriously what is this crap? RegieRocker Sep 2012 #28
You know, it does give millions of people a stake in stability. WCGreen Sep 2012 #30
That makes no sense RegieRocker Sep 2012 #33
A couple of things PowerToThePeople Sep 2012 #31
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