Tax Code Overhaul Offers Break To Renters

This is source I found from another site, main source you can find in last paragraph

Individual income tax forms.(Photo: Daniel Acker, Bloomberg)

CONNECT>TWEET>LINKEDINCOMMENTEMAILMORE

 

For decades, the federal tax code has lavished huge breaks on people who buy houses. The biggest break allows home buyers to deduct all of their interest payments on loans of up to $1 million.

Now, as part of their sweeping plan to slash taxes and overhaul the tax code, Republicans are proposing a different approach, one that would give people a break for not buying houses.

Not surprisingly, the real estate lobby is outraged.

The GOP plan wouldn't eliminate the mortgage interest deduction, a break that costs the Treasury $70 billion per year. But it would encourage people not to claim it by giving them an alternative: a greatly expanded standard deduction. 

The plan would expand the standard deduction for people who don't itemize from its current level of $6,350 to $12,000 for individuals (and from $12,700 to $24,000 for a couple). As a result, much of the home-buying public would stop bothering with the mortgage interest deduction.

This would not amount to a big tax break overall, as the expanded deduction would largely be eaten up by the end of the $4,050 personal exemption for filers and spouses. But it would be a substantial break for people who don’t own homes or have paid off their mortgages. This group includes the poor, the young, the itinerant and the elderly.

These might seem likely worthy groups for a tax break. But the housing lobby is dead set on keeping them from getting it. Real estate interests have come out strongly against the proposal and have begun addressing it with hyperbolic language and imagery.

Material put out by the National Association of Realtors, for instance, uses a photo of a tornado-ravaged house to warn of what the Republican tax plan could do to home ownership. It also has a picture of an F-117 stealth attack plane to underscore how "stealthy" Republicans have been in offering an alternative to the mortgage interest deduction, rather than calling for its outright elimination.

The fight shows the two-sided nature of tax breaks. They benefit one group of people — in this case, people borrowing lots of money to buy their homes — at the expense of other people.

Truth is, there is no good reason the tax code should discriminate against someone who can’t, or doesn’t want to, buy a house. In many cases, renters need more help than homeowners, particularly those able to take out a loan approaching $1 million.

Another view: Hiding a tax hike

On paper, the key promise of a higher standard deduction looks simple: tax savings for middle-class families.

In reality, there’s a homeowner tax hike hiding in plain sight.

The recent tax-reform framework doubles the standard deduction from $6,350 to $12,000 for single filers, and from $12,700 to $24,000 for joint filers. The proposals pay for this higher standard deduction, in part, by eliminating the personal exemptions currently in the tax code.

The smallest families might do well under such a proposal, but it poses a threat to others. The result is a likely tax increase on millions of middle-class homeowners, who take advantage of current-law incentives for homeownership.

You read that correctly: A large number of middle-income Americans will see a tax increase. That’s too high a price to pay for limited “simplification” of the tax code.

In addition, the near doubling of the standard deduction means all but the top 5% of American tax filers won’t itemize. That nullifies the incentive effect of the mortgage interest deduction and essentially ends a century-long tradition of encouraging homeownership through the tax code.

Additionally, tax filers will still need to calculate whether or not to itemize, eliminating a great deal of the simplification promised by the higher standard deduction.

Everyone wants lower taxes, and Realtors are strong believers in lowering rates when done in a way that’s fiscally responsible and makes sense. Saddling homeowners with a larger tax bill, or picking winners and losers between families, does neither.

William E. Brown is president of the National Association of Realtors.

This is source I found from another site, main source you can find in last paragraph

Source : http://www.news-press.com/story/opinion/2017/10/05/tax-code-overhaul-offers-break-renters/734662001/

commerce

Small

Tax code overhaul offers break to renters
Homeowners Have Had It Good. Too Good, Says the Tax Bill.
Correction: Tax Overhaul-Key Elements to Expire story
What the proposed tax code means for schools, students and parents
Those tax breaks in the GOP plan? Enjoy them while they last
With Midlands lawmakers on board, Congress is expected to enact tax code overhaul next week
Donald Trump And GOP Leaders Could Be Enriched By Last Minute Tax Break Inserted Into Final Bill
7 Items In The GOP's Combined Tax Bill That Could Affect Real Estate