What is Home Mortgage Interest?

Homes in suburban Los Angeles/ Photo by JR Woodward

By Jackie Stein

Home Mortgage Interest Deduction: Your Stories

Doris from Fort Washington,MD,wrote to tell us that

“without the HMID I would not be able to manage my expenses at all.” As a single person with a clerical job,she said “I honestly don’t know how I’d be able to manage without HMID. The prospect of losing this deduction terrifies me!”

Jonathan from Escondido,CA,sold real estate for several years and decided:

“that the big beneficiaries of the home loan interest deduction are the banks.” The HMID makes homes more affordable “without lowering the price tag of the house (and therefore the amount of the loan) … and therefore pushes the price up.” After doing tax savings calculations with clients for many years,he felt that “if there were no home loan interest deduction,the price of real estate would be lower.” So,he concluded,“the deduction does not really benefit the working class.”

Finally,Robert,from Milwaukee,WI,was frustrated that

wealthy people with boats and second homes could use the HMID to "finagle some kind of write off, " since second homes and even yachts can qualify for the HMID,while people like him had to pay their full share of taxes.

Home Mortgage Interest Deduction: How Expensive,and Who Benefits?

The HMID is estimated to cost the U.S. Treasury $93 billion in fiscal 2013:

  • 15 percent of those savings go to the top 1 percent of households – those who make $462, 500 and above*
  • 6 percent of the benefits go to families earning between $54, 000 and $78, 000
  • 2 percent of benefits from the HMID go to families making less than $54, 000.

I think in this case, because it is a housing

2010-12-23 11:22:46 by RoxnSox

Allowance, in effect, the whole house is used for business.
"What types of housing related expenses can be included in the housing
allowance? Most reasonable household expenses can be included in the
housing allowance, for example: down payment on a home, mortgage payments
(including both interest and principal), home equity loan payments (assuming the
loan proceeds are used for housing-related expenses), real estate taxes,
property insurance, utilities, furnishings and appliances (including repairs),
structural repairs, remodeling, yard maintenance and improvements, pest control,
snow removal, maintenance items, and trash pickup

I'll call bullshit on your bullshit.

2010-12-23 10:33:24 by RoxnSox

The $65k for a housing allowance isn't salary, it's similar to gross gains from a business. Thus, you can subtract out business expenses. In this case the P&I of the home as well as the furniture and utilities. I assume the "other" is documented in the tax return and the blogger just lumped it together for his post.
I'm also not sure why he can double up on the Mortgage interest and the Real Estate taxes - the blogger also comments about this - he doesn't know why it's allowed, but apparently it is.
I fail to see what the charity deduction limit has to do with anything

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