$30K in Standard Deduction

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Submitted by dumbrenter on April 26, 2017 - 6:29am

Wondering how this would affect the housing market. One of the big tax change rumors is that the standard deduction will be raised to $30,000 from current $12k something.
Will this cause a change in house or rental prices? Or a non-issue on that front?
Guess it will affect those whose itemized deductions were between 12,000 and 30,000... but I am thinking many home buyers in San Diego have itemized deduction way higher than $30,000.

Submitted by harvey on April 26, 2017 - 7:17am.

It would depend on what other deductions are eliminated or reduced: mortgage interest, property taxes, state taxes?

If the plan was simply to raise standard deduction and eliminate mortgage deduction, I don't think your specific numbers wouldn't impact most SD homeowners enough to influence prices.

If other itemized deductions are eliminated as well, that would mean raising taxes on much of the upper middle-class and effectively eliminating federal taxes for most of the lower middle class...remember the disdain for the the 47% that "don't pay any taxes"? It will never get through congress.

The "simplify taxes" agenda is just another part of the schtick that will accomplish nothing. The basic 1040 stuff like W2 income and typical the deductions I listed above aren't what makes taxes complicated. Taxes become complicated when one has business income. And that will not change.

So enjoy the show, but don't let concerns about the possible outcomes influence your real estate investment decisions. It's all just theatre.

Submitted by andymajumder on April 26, 2017 - 1:44pm.

I think one area which would alarm at least some homeowners paying a lot of property taxes as well as Mello roos-

"At the same time, the plan would eliminate the federal income-tax deduction allowed for state and local taxes -- a provision that would hit high earners in high-tax states, including New York and New Jersey. The only itemized deductions that would be preserved under the plan would be for home mortgage interest and charitable contributions."

I would definitely add CA to the list of states impacted by this. Not sure what are the chances something like this would pass, but if it does, it could hurt property prices.

Submitted by gzz on April 26, 2017 - 2:05pm.

This has 0 chance of passing. Cal House Republicans will never let their party pass something that limits the mortgage and state income tax deductions.

Submitted by FlyerInHi on April 26, 2017 - 2:49pm.

The coastal states with high property prices will be negativey affected because our mortgage deductions will be relatively less valuable. People in podunk area with low property prices will suddbenly have standard deduction greater than itemized.

Submitted by harvey on April 26, 2017 - 3:14pm.

So a few more details are out today but nothing that resembles a comprehensive plan. It does look like the mortgage deduction is safe.

He is trying to eliminate state and local taxes as a deduction, likely as a "fuck you" to the blue states.

The best part is the emphasis on fewer brackets: three instead of seven. Because all those brackets were just so overwhelming to Turbo Tax.

It's all gimmicks that fail basic tests of arithmetic.

Submitted by andymajumder on April 26, 2017 - 3:41pm.

True, this seems like a big tax cut for folks in midwest or south with low property prices, who would have a pretty large standard deduction. But, could hit the middle & upper middle class folks in the coastal areas who rely on the itemized deduction of state & local taxes including rather high property taxes due to valuation of their homes. Don't think it will pass in its current form, from Nytimes ---"That proposal is likely to engender strong resistance from home builders and real estate agents, who fear it would diminish the importance of the mortgage interest deduction, as well as other sectors that could see the tax benefits associated with their businesses curbed or eliminated."

Submitted by Coronita on April 26, 2017 - 7:03pm.

People who upper income wage earners don't get to fully enjoy the itemized deduction from state taxes, property taxes, and vehicle registration taxes as people think they enjoy anyway...

It's called AMT.

The tax upper income wage earners get hit with every year, well below what the taxes you normally would pay if you were able to fully deduct state/property/vehicle registration taxes. In fact, for most upper income wage earners, there's no point in even itemizing things such as vehicle registration taxes because it makes absolutely no difference after AMT.

AMT tax rate is calculated such that state/property/vehicle registration taxes cannot be deducted.

Submitted by FlyerInHi on April 26, 2017 - 7:56pm.

What about the middle middle? Real estate values are created at the margins by people entering the market and creating demand.

Submitted by Coronita on April 26, 2017 - 8:34pm.

FlyerInHi wrote:
What about the middle middle? Real estate values are created at the margins by people entering the market and creating demand.

Well, that does suck for them, doesn't it?

Not my problem, not my concern.

Now all that's left to be done is this administration needs relax lending standards again, so we have irresponsible borrowing again, and irrational home buying again, to drive real estate prices even higher to even more irrational levels, again...So that folks can make the same exact mistakes they did a few years ago.....This time it will be different. I have a lot more homes that I could sell and milk it for all it's worth. I don't know why many of you still think home prices are going to crash. We haven't even entered the irresponsible borrowing phase (yet). But it will come, probably.

Again, not my problem, not my concern.

Submitted by SK in CV on April 26, 2017 - 8:31pm.

flu wrote:
People who upper income wage earners don't get to fully enjoy the itemized deduction from state taxes, property taxes, and vehicle registration taxes as people think they enjoy anyway...

It's called AMT.

The tax upper income wage earners get hit with every year, well below what the taxes you normally would pay if you were able to fully deduct state/property/vehicle registration taxes. In fact, for most upper income wage earners, there's no point in even itemizing things such as vehicle registration taxes because it makes absolutely no difference after AMT.

AMT tax rate is calculated such that state/property/vehicle registration taxes cannot be deducted.

That's a California thing. And a few other states with high top marginal rates. States with top marginal rates of 5% or less, AMT doesn't hit very often. Irony is, the so-called plan does away with AMT, and the cause of the AMT for most high wage earners. Lose before, lose again. The big benefit is for those with humungous income that have preference items that drop their overall rate below the AMT rate.

Submitted by Coronita on April 26, 2017 - 8:45pm.

SK in CV wrote:
flu wrote:
People who upper income wage earners don't get to fully enjoy the itemized deduction from state taxes, property taxes, and vehicle registration taxes as people think they enjoy anyway...

It's called AMT.

The tax upper income wage earners get hit with every year, well below what the taxes you normally would pay if you were able to fully deduct state/property/vehicle registration taxes. In fact, for most upper income wage earners, there's no point in even itemizing things such as vehicle registration taxes because it makes absolutely no difference after AMT.

AMT tax rate is calculated such that state/property/vehicle registration taxes cannot be deducted.

That's a California thing. And a few other states with high top marginal rates. States with top marginal rates of 5% or less, AMT doesn't hit very often. Irony is, the so-called plan does away with AMT, and the cause of the AMT for most high wage earners. Lose before, lose again. The big benefit is for those with humungous income that have preference items that drop their overall rate below the AMT rate.

Yup....lol....Buy a land and make it a "farm"....

But in all seriousness, come on people, you know this has no shot at passing right? You know Trump's mo... Throw something out there that seems to appeal to the lowest common denominator of understanding, knowing realistically it has no chance of succeeding. Then playing CYA and saying "See, I tried to do something" and then assess blame on "Congress/Judges/The Establishment" for why it didn't go through.

How many times have we seen this playbook now?

Trump won't challenge the ACA, won't challenge any of the court rulings. He's just buying time and distractions on the next item to "fix"....I mean, if he actually did challenge and win, it would be considerably more work for his administration, and we all know he's not really trying to do anything that requires more work...

You guys worry too much. I'm having a great time. It feels like everyone is drunk, and no one cares. lol.

Submitted by SK in CV on April 26, 2017 - 9:00pm.

flu wrote:
But in all seriousness, come on people, you know this has no shot at passing right? You know Trump's mo... Throw something out there that seems to appeal to the lowest common denominator of understanding, knowing realistically it has no chance of succeeding. Then playing CYA and saying "See, I tried to do something" and then assess blame on "Congress/Judges/The Establishment" for why it didn't go through.

How many times have we seen this playbook now?

Trump won't challenge the ACA, won't challenge any of the court rulings. He's just buying time and distractions on the next item to "fix"....I mean, if he actually did challenge and win, it would be considerably more work for his administration, and we all know he's not really trying to do anything that requires more work...

You guys worry too much. I'm having a great time. It feels like everyone is drunk, and no one cares. lol.

I think your take on this is pretty good. He craves good press about himself. He can't get it on anything that requires hard work. History shows, he picked the wrong party for hard work when it comes to government policy.

I'll give you something to worry about. There's only one thing he really has control over that he doesn't have to worry about congress or the courts, that's his position as CIC. He doesn't want to get mired into more muck in the ME. That's already failed. Even he isn't stupid enough to get into a war with that crazy fuck in NK. But I'm pretty sure he's gonna start a war. My guess is Venezuela. Take out Maduro, quick like, and still leave the oligarchs in place. I'm hope I'm wrong. But he's gonna drop more bombs and more people are gonna die. Because he wants approval.

Submitted by ltsddd on April 26, 2017 - 10:00pm.

Good info on what this tax plan means:

http://www.msn.com/en-us/money/taxes/ame...

Submitted by harvey on April 26, 2017 - 10:04pm.

Yeah, he'll probably try a Grenada and/or a Panama. Venezuela is a good guess. Funny thing is his knowledge of history is so lacking that he likely doesn't even know about those little "wars."

Sure he's CIC but he's not going to contradict his generals - they'll push back and he doesn't have the courage or the commitment to override them. America has nothing to gain from military conflict in the year 2017, and our military leadership knows that.

I was apprehensive about Trump initially as it seemed that he is capable of something really reckless. But now it seems he's giving up on actually doing anything, especially since he's lost so much influence already.

Sorry abut the threadjack - the point is that Trump won't change taxes much at all. He'll probably lower them a bit in general, but not in any way that would specifically affect SD real estate trends.

Submitted by Coronita on April 27, 2017 - 4:04am.

I still don't get after decades of seeing how our government works, people still think there is one single "silver bullet" catastrophic/apocalyptical, earth shattering new tax law change forced by the government will drastically adversely affect home prices. It's like some folks are desperately hoping for an apocalypse in order to be able to obtain home ownership.

I see the only way we get an huge housing correction is if the government implements policies that enables the most vile and financially irresponsible debauchery from the a majority of the financially irresponsibles in this country....And that happens when the government provides the necessary financial tools for your average financially irresponsible person in this country to hang themselves on their own financial noose. Government doesn't need to "force" anything on people to cause them financial distress...Given tools, people in this country are fully capable of doing it to themselves...

The best way to ruin people financially is to allow people spend like drunks and for them to commit financial suicide themselves, by giving them the illusion they have more money then they really do, and can spend more money than they really should without any consequences....Passing more unfavorable tax laws that reduces income probably has the opposite effect, as it would piss off your average American, and they would be more watchful/defiant and not act/do financially irresponsibly. , they'll take on more work for more income, they'll cut corners elsewhere in their budget, they'll cheat on their taxes, they'll do everything to remain defiant. They won't go down, out of spite. But extend a credit line to them, yeah they'll blow it.

It's like getting people financially drunk such that that don't make very good decisions. We're not there yet. Short of a restart of irresponsible borrowing where irresponsible americans who otherwise has no business buying a home, can once again borrow money they really can't afford to pay back, to buy a home they really can't afford, I don't see a massive correction. Why would the majority of the home ownership among the stronger financial hands right now feel compelled to sell right now? They got in at the lowest rates, lowest payments, in many cases, lower than rent...And especially if we have any meaning inflation, their 30 year locked in payment was look like a walk in a the park.....

But, irresponsible borrowing..it's coming..probably....

Submitted by SK in CV on April 27, 2017 - 6:57am.

ltsdd wrote:
Good info on what this tax plan means:

http://www.msn.com/en-us/money/taxes/americans-may-soon-kiss-these-lucrative-individual-tax-deductions-goodbye/ar-BBAq2JM

That article is written by someone who doesn't know how taxes work. The actual plan is less than a page long. Better to go directly to what Treasury issued and make your own guesses about what it means. (e.g. article says alimony deduction and student loan interest may go. Fake news, nothing in what Treasury issued to even guess that's part of the plan.)

Submitted by spdrun on April 27, 2017 - 8:09am.

flu- the bubble is being driven by other forms of easy money (margin debt, portfolios growing for down payments, 2% down loans courtesy of Mel "the Skell" Watt).

As far as the tax plan, Mr. Market seems to think it's a big 'ol snooze. Glad the Trump Bump is losing its effect.

Submitted by no_such_reality on April 27, 2017 - 8:26am.

The market is snoozing because they know this is Trump's trial balloon and not an actual proposal or anything else that as even a margin of a chance of passing.

Submitted by Coronita on April 27, 2017 - 8:48am.

spdrun wrote:
flu- the bubble is being driven by other forms of easy money (margin debt, portfolios growing for down payments, 2% down loans courtesy of Mel "the Skell" Watt).

As far as the tax plan, Mr. Market seems to think it's a big 'ol snooze. Glad the Trump Bump is losing its effect.

If you say so.

I've disconnected from here for some time, because none of the doom and gloom scenarios people have predicted materialized. Can't beat the system, join it.I'm having too much fun elsewhere.

One thing is fairly certain. The same folks that missed the boat the last time will most likely will be the same folks that miss the boat this time. Just like the old RE adage about "it's always a good time to buy a house", a lot of people think the complete opposite.. "it's never a good time to buy a house".

Have fun waiting guys.

Submitted by harvey on April 27, 2017 - 8:51am.

no_such_reality wrote:
The market is snoozing because they know this is Trump's trial balloon and not an actual proposal or anything else that as even a margin of a chance of passing.

It's not a "trial balloon" - it's a loose collection of unworkable ideas that have superficial appeal to his base.

Trump will never actually make a formal proposal on taxes, on healthcare, on anything big.

Because he's dug himself into a huge hole by making outrageous and completely unfeasible promises. It's the same old Republican themes amplified by Trumpian-level bullshit: lower taxes while reducing the deficit while increasing military spending...with a few Trump extras like increasing infrastructure spending.

He can't make an actual proposal with these parameters because it would be exposed as laughably unfeasible, and the the last thing he wants is to be accountable.

So he'll defer it to congress, like he did with healthcare. It will flounder and Trump will blame everyone else.

This is the "leadership" we are going to see for the next four years.

Submitted by Coronita on April 27, 2017 - 8:51am.

harvey wrote:
no_such_reality wrote:
The market is snoozing because they know this is Trump's trial balloon and not an actual proposal or anything else that as even a margin of a chance of passing.

It's not a "trial balloon" - it's a loose collection of unworkable ideas that have superficial appeal to his base.

Trump will never actually make a formal proposal on taxes, on healthcare, on anything big.

Because he's dug himself into a huge hole by making outrageous and completely unfeasible promises. It's the same old Republican themes amplified by Trumpian-level bullshit: lower taxes while reducing the deficit while increasing military spending...with a few Trump extras like increasing infrastructure spending.

He can't make an actual proposal with these parameters because it would be laughably bad, and the the last thing he wants is to be accountable.

So he'll defer it to congress, like he did with healthcare. It will flounder and Trump will blame everyone else.

This is the "leadership" we are going to see for the next four years.

And exactly nothing is going to get done... I love it!

Flu, out (mic drop)

Submitted by spdrun on April 27, 2017 - 9:23am.

flu - if you think the markets will always go up, it's bubble mentality.

It's "always a good time to buy" except some times were better than others. 2007 might have been good as compared to now (in some cities), but buying in 2009 was better.

Submitted by no_such_reality on April 27, 2017 - 9:57am.

flu wrote:
harvey wrote:
no_such_reality wrote:
The market is snoozing because they know this is Trump's trial balloon and not an actual proposal or anything else that as even a margin of a chance of passing.

It's not a "trial balloon" - it's a loose collection of unworkable ideas that have superficial appeal to his base.

Trump will never actually make a formal proposal on taxes, on healthcare, on anything big.

Because he's dug himself into a huge hole by making outrageous and completely unfeasible promises. It's the same old Republican themes amplified by Trumpian-level bullshit: lower taxes while reducing the deficit while increasing military spending...with a few Trump extras like increasing infrastructure spending.

He can't make an actual proposal with these parameters because it would be laughably bad, and the the last thing he wants is to be accountable.

So he'll defer it to congress, like he did with healthcare. It will flounder and Trump will blame everyone else.

This is the "leadership" we are going to see for the next four years.

And exactly nothing is going to get done... I love it!

Flu, out (mic drop)

LOL, harvey I have to give you that one. I didn't go look at what the WH actually provided until this morning. I looked at what all the media sources were saying.

What are they all reporting on? That's barely a collection of campaign wishes.

Submitted by dumbrenter on April 27, 2017 - 11:29am.

no_such_reality wrote:
The market is snoozing because they know this is Trump's trial balloon and not an actual proposal or anything else that as even a margin of a chance of passing.

Was more focused on what this means to rents & property prices in San Diego, but this is interesting! So no major decision is already priced in then

Submitted by dumbrenter on April 27, 2017 - 11:34am.

I was assuming (I don't know why.. have no basis here) that the homeowners across CA 56 from Carmel Valley to Carmel Mtn. had itemized deduction that were between $12k and $30k and this might affect them or future homeowners. If they itemize to more than $30K this would not affect them at all.

harvey wrote:
It would depend on what other deductions are eliminated or reduced: mortgage interest, property taxes, state taxes?

If the plan was simply to raise standard deduction and eliminate mortgage deduction, I don't think your specific numbers wouldn't impact most SD homeowners enough to influence prices.

If other itemized deductions are eliminated as well, that would mean raising taxes on much of the upper middle-class and effectively eliminating federal taxes for most of the lower middle class...remember the disdain for the the 47% that "don't pay any taxes"? It will never get through congress.

The "simplify taxes" agenda is just another part of the schtick that will accomplish nothing. The basic 1040 stuff like W2 income and typical the deductions I listed above aren't what makes taxes complicated. Taxes become complicated when one has business income. And that will not change.

So enjoy the show, but don't let concerns about the possible outcomes influence your real estate investment decisions. It's all just theatre.

Submitted by FlyerInHi on April 27, 2017 - 1:44pm.

If your deduction is the same rent or buy, then it takes away the advantage of buying. RE agents lose that selling point which they push very hard as "you can write it off" (as if you were a big shot), so all else being equal it should affect real estate.

Here's the 1 page proposal that looks it was written by a "standard retard" as Ann Coulter would put it.
http://www.cnn.com/2017/04/26/politics/w...

Submitted by SK in CV on April 27, 2017 - 4:32pm.

Confirmed today by WH, 401k plans are out as part of this plan, even though not mentioned in yesterday's release. Presumably referring to current deferrals, not monies already in plans. Why? Because $18,000 deferrals don't mean shit to really rich people.

Submitted by SK in CV on April 27, 2017 - 4:45pm.

harvey wrote:

The "simplify taxes" agenda is just another part of the schtick that will accomplish nothing. The basic 1040 stuff like W2 income and typical the deductions I listed above aren't what makes taxes complicated. Taxes become complicated when one has business income. And that will not change.
.

That's a great point but it's still way more complicated than just "business" income. It's the source of the business income, the type of entity where the business income came from. Is it business income or investment income? Passive or active? With or without active participation, with or without material participation. Are there tax preferences used in arriving at the income amount? There are 20 different lines for non-wage income on the 1040, and many of them include many types of income. And then, there are an additional 13 lines of adjustments to income, many of those including different types of adjustments. Tax returns aren't complicated because of too many rates. They're complicated because writing tax law is complicated. Way too complicated for Donald Trump.

Submitted by dumbrenter on April 28, 2017 - 8:00am.

SK in CV wrote:
Confirmed today by WH, 401k plans are out as part of this plan, even though not mentioned in yesterday's release. Presumably referring to current deferrals, not monies already in plans. Why? Because $18,000 deferrals don't mean shit to really rich people.

small blessings for poor folks like me! getting something in return now.

Submitted by FlyerInHi on April 28, 2017 - 9:11am.

dumbrenter wrote:
SK in CV wrote:
Confirmed today by WH, 401k plans are out as part of this plan, even though not mentioned in yesterday's release. Presumably referring to current deferrals, not monies already in plans. Why? Because $18,000 deferrals don't mean shit to really rich people.

small blessings for poor folks like me! getting something in return now.

Trump is leaving 401k deductions in place. It's just status quo ante. You're not getting any something.

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