Timeline for Why do many governments incentivize / subsidize (personal) home ownership?
Current License: CC BY-SA 4.0
12 events
| when toggle format | what | by | license | comment | |
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| Jan 6, 2023 at 14:12 | comment | added | JonathanReez | If you’re truly confident 2-3% rates are never coming back there’s financial instruments that will make you a lot of money if you’re right ;-) | |
| Jan 6, 2023 at 13:36 | comment | added | Peteris | @JonathanReez I'd say that it's a relatively straightforward consequence of the fact that home prices are effectively set by how much mortgage people can get, and any market-scale changes to mortgage conditions mean that after the short-term fluctuations settle down, the average monthly mortgage payment is essentially the same (the max of what people can afford and lenders are willing to give) but home prices adjust to meet that. So the expected long-term effect of some tax on mortgage payments is that people are able to pay smaller payments, and thus house prices shrink. | |
| Jan 6, 2023 at 1:44 | comment | added | dave_thompson_085 | @GlenYates: yes TCJA reduced the principal limit to 750k (half if MFS), although loans before Dec 16 2017 were grandfathered. TCJA also restricted the deduction to loans for construction, purchase or improvement of the home (no more using home equity for a subsidized vacation in the Bahamas) (not grandfathered). And it reduced or eliminated some other itemized deductions while increasing the standard deduction, making itemizing beneficial for significantly fewer taxpayers (IRS figures show itemizing fell from about 30% to about 10%). | |
| Jan 5, 2023 at 21:33 | comment | added | David Hammen | @GlenYates The real estate lobby was "deeply disappointed" that the reduction was even proposed, and then they fought it tooth and nail. | |
| Jan 5, 2023 at 21:31 | comment | added | David Hammen | @JonathanReez 2-3% interest rates are a thing of the past. | |
| Jan 5, 2023 at 21:31 | comment | added | Glen Yates | "The mortgage interest deduction has been changed only one time" - Didn't the 2017 Tax Cuts and Jobs Act (TCJA) change this again to cap the loan limit to $750,000? Also, I struggle to understand why the real estate lobby would be "deeply disappointed" if a reduction did not make it into law. | |
| Jan 5, 2023 at 21:25 | comment | added | JonathanReez | @MichaelRichardson For 2010-2021, absolutely. Prior to that a 10% mortgage wouldn't have been unheard of. I suspect the study David is referring to does not apply to 2-3% interest rates where the standard deduction is indeed much more appealing to most. | |
| Jan 5, 2023 at 21:10 | comment | added | David Hammen | @MichaelRichardson A $350K mortgage for a house is fairly common. (There are many areas in the country where that would be a rundown starter house.) That might result in about $25K in interest payments, at least at first. While that's not quite the standard deduction for a married couple, it does open the door to lots of other deductions. If the mortgage interest was not deductible (or if ones mortgage is fully paid off), those other deductions typically don't come close to matching the standard deduction. | |
| Jan 5, 2023 at 20:09 | comment | added | Michael Richardson | Is there a way to tell what percentage of homeowners with mortgages actually itemize their taxes? Don't most people (in low to mid income ranges) just take the standard deduction? | |
| Jan 5, 2023 at 19:24 | comment | added | JonathanReez | It's been estimated that home prices would drop by about 15% should the mortgage interest deduction be removed => interesting, would you mind adding the source if you remember it? Not that I doubt it's possible but would be curious to see the numbers. | |
| Jan 5, 2023 at 19:23 | comment | added | dan04 | Note that interest on all loans used to be tax-deductible. The Tax Reform Act of 1986 changed this, but the mortgage interest deduction was kept because it was politically infeasible to remove it. | |
| Jan 5, 2023 at 13:33 | history | answered | David Hammen | CC BY-SA 4.0 |