New tax plan

User Forum Topic
Submitted by moneymaker on November 2, 2017 - 10:35am

Guess I won't be buying any expensive house. Not sure if it helps me or hurts me.

Submitted by moneymaker on November 2, 2017 - 10:52am.

I guess if one buys an average house and puts atleast 10% down, then would not be a problem, I'm sure the 500k max is the loan balance and not the home value/price.

Submitted by spdrun on November 2, 2017 - 11:23am.

Is it 500k *maximum* deductibility, or does deduction cliff to zero after 500k+ loan balance?

Submitted by kev374 on November 2, 2017 - 11:25am.

this may be a good thing, home ownership is subsidized too much and the benefit goes only to the affluent as most people in lower cost areas don't use the mortgage interest deduction anyway since they don't itemize. There is no reason why society should subsidize wealth building by the fat cats in our society.

And for the record anyone who can afford to comfortably buy the average SoCal home is by definition a fat cat, average list price in OC is $750k, are you F-ing kidding me?

Submitted by bewildering on November 2, 2017 - 11:39am.

The loss of state income tax deduction will mean net loss for me. This plan hits upper middle class hard.

Basically, I am paying tax on my state tax. Cheers assholes.

Submitted by harvey on November 2, 2017 - 11:50am.

It's clearly designed to be a handout to the wealthy while at the same time a punishment for blue states.

And of course there is no regard for balancing the budget.

Pass-through income capped at 25% is a big win for top income earners. It will be interesting to see how many executives become consultants instead of employees.

Loss of state tax deduction hits CA and NY, but of course they they left property tax deduction in for TX.

Real estate limits ding coastal states.

Overall it's reckless, cynical, and partisan.

Yup, sounds like a Republican plan.

Submitted by plm on November 2, 2017 - 11:56am.

I calculated the numbers and it seems to be a wash for married 400K income. Loss of state tax deduction offset by increased standard deduction and lower tax brackets. If you add in the removal of AMT, the new plan should be lower.

But if you live in a low tax state, then you will do much better.

I think it hurts home owners though, since the mortgage interest deduction might not apply any more if standard deduction is better.

Submitted by andymajumder on November 2, 2017 - 12:01pm.

I think its premature to think anything in its current form will pass. Homebuilders association, national realtors association, small business association have all come out against the plan. The biggest risk the plan in its current form is that it will hit the coastal housing markets hard, effectively this increases the cost of buying a home in these regions significantly and will crash the market which in turn will affect economy and job losses for folks down the chain.

Submitted by scaredyclassic on November 2, 2017 - 12:49pm.

i hate this plan. the 1 bright side of the election 4 me was i though trump would probably lower my taxes, like 62% probability.

i think ill pay more, esp w loss of child exemotion. having many kids and making $ is no good.

im actually pissed, this is our highest earnings years ever, over 400k, goddamn republicans in office and i cant catch a break.

plus, old posters here once promised me never to worry about mtg. interest ded ever being eliminated. i knew i was right to predict disaster.

all i want is to not pay more. but i guess thats too much to ask

Submitted by kev374 on November 2, 2017 - 12:52pm.

35% rate starts at 200k for singles and $1 million for married? Sounds like discrimination towards singles to me.

Submitted by plm on November 2, 2017 - 1:10pm.

kev374 wrote:
35% rate starts at 200k for singles and $1 million for married? Sounds like discrimination towards singles to me.

Married 35 percent rate starts at 260K. Discrimination of married people, not singles.

Submitted by ucodegen on November 2, 2017 - 1:17pm.

Here is a link to the actual bill.. and you will be able to download it for local copy.

https://waysandmeansforms.house.gov/uplo...

Don't know how long it will be there - odd naming, does not even refer to which session of congress. I couldn't pull it directly from house bill records.

Submitted by spdrun on November 2, 2017 - 1:39pm.

The biggest risk the plan in its current form is that it will hit the coastal housing markets hard, effectively this increases the cost of buying a home in these regions significantly and will crash the market which in turn will affect economy and job losses for folks down the chain.

Risk or feature. Depending on whether you're interested in investing in distressed property or not :)

Submitted by kev374 on November 2, 2017 - 2:26pm.

andymajumder wrote:
it will hit the coastal housing markets hard, effectively this increases the cost of buying a home in these regions significantly and will crash the market which in turn will affect economy and job losses for folks down the chain.

This is an excellent outcome. Regular people will be able to afford homes again just like it has been the case for many many decades before the speculative run-up starting in 2003.

Submitted by kev374 on November 2, 2017 - 2:27pm.

plm wrote:

Married 35 percent rate starts at 260K. Discrimination of married people, not singles.

Married people don't need more breaks, they have had enough over the years especially those with kids. Singles have been the biggest contributors income percentage wise.

Submitted by harvey on November 2, 2017 - 2:28pm.

plm wrote:
I calculated the numbers and it seems to be a wash for married 400K income. Loss of state tax deduction offset by increased standard deduction and lower tax brackets. If you add in the removal of AMT, the new plan should be lower.

But if you live in a low tax state, then you will do much better.

I think it hurts home owners though, since the mortgage interest deduction might not apply any more if standard deduction is better.

I believe at $400K married your bracket will actually be higher than it is now. But I'm not sure about the effective rate. If the 35% bracket starts at $260K, much of a $400K income will be taxed at a pretty high rate.

Submitted by harvey on November 2, 2017 - 2:31pm.

kev374 wrote:
andymajumder wrote:
it will hit the coastal housing markets hard, effectively this increases the cost of buying a home in these regions significantly and will crash the market which in turn will affect economy and job losses for folks down the chain.

This is an excellent outcome. Regular people will be able to afford homes again just like it has been the case for many many decades before the speculative run-up starting in 2003.

That makes no sense.

Submitted by harvey on November 2, 2017 - 4:56pm.

According to Fox and the conservative Tax Foundation, everyone gets lower taxes:

http://www.foxbusiness.com/features/2017...

And it's gets better. Look closely at the example on the far right if the chart: The gays see the least benefit!

Submitted by The-Shoveler on November 2, 2017 - 4:08pm.

spdrun wrote:

The biggest risk the plan in its current form is that it will hit the coastal housing markets hard, effectively this increases the cost of buying a home in these regions significantly and will crash the market which in turn will affect economy and job losses for folks down the chain.

Risk or feature. Depending on whether you're interested in investing in distressed property or not :)

Mostly I think it would affect high end (maybe > 600/800K), not many homes pencil out as rentals in that range.

IMO not many (on the blue state coasts) will win with this in its present form.

Submitted by scaredyclassic on November 2, 2017 - 4:07pm.

kev374 wrote:
plm wrote:

Married 35 percent rate starts at 260K. Discrimination of married people, not singles.

Married people don't need more breaks, they have had enough over the years especially those with kids. Singles have been the biggest contributors income percentage wise.

marriage tax penalty is the phrase, not singles tax penalty. many marrieds would do better divorced, taxwise

Submitted by kev374 on November 2, 2017 - 4:41pm.

scaredyclassic wrote:

marriage tax penalty is the phrase, not singles tax penalty. many marrieds would do better divorced, taxwise

what I meant was that married people share a lot of expenses and on top of it earn double the income so they don't need that much relief.

Both Singles and Married people have fixed costs, adding an additional person to a household does not result in doubling of the cost but it's a fractional increment. Deductions and exemptions are meant to offset some of the costs of living, by this argument yes, there is no penalty, it's fair. $260k or 30% higher than a single sounds about right.

Submitted by Coronita on November 2, 2017 - 5:11pm.

So I guess given ones' allocation of available money, one would divert as much money to the primary to pay it off early, or at least to the point where your mortgage interest deduction starts to phase out and soak your rentals with as much debt as possible, were you can still write off things as an expense?

I don't think this tax hit to salaried upper income people would have made the much more of a difference under a blue president and congress. When people talk about taxes reform, that always mean taxing high salaried folks more, not really the wealthy.

Fortunately, no mortgage for me and with my current gig I get paid a heck of a lot of doing a lot less work than before, since now I "manage" lol.

It's a little funny the direction we are headed feels like America's version of China's Cultural Revolution where the well educated, financially sound people in this country take a huge back seat to the dipshits in this country. If I wasnt so relaxed as I head into my older years of not really giving a shit, I wouldn't be laughing at the irony. I would be crying. Feel sorry for all the young generation that will be a lost generation. Meanwhile, China and Taiwan now recognize dual citizenship, so I have more options now.lol.... just kidding...sort of.

It's also funny somestill think magically home prices will crash 50%+ and and be able to take advantage when at the same time be subject to the 35% tax rate that would be needed to be able to afford said still expensive coastal property... Check the financial pecking order....I have a feeling on that ladder, folks aren't at the top steps as one thinks.....

Submitted by The-Shoveler on November 2, 2017 - 5:12pm.

Actually, I think this might spur a new type of property management Biz,
Where two families get together to buy high end homes that they rent to each other LOL.
Come to think of it I don’t know why they are not doing this now, A lot more write off’s that way,
Or maybe they make an agreement where each just say they are renting their neighbors house (exchange mailbox keys, not door keys etc..) LOL.

Submitted by scaredyclassic on November 2, 2017 - 6:48pm.

The-Shoveler wrote:
Actually, I think this might spur a new type of property management Biz,
Where two families get together to buy high end homes that they rent to each other LOL.
Come to think of it I don’t know why they are not doing this now, A lot more write off’s that way,
Or maybe they make an agreement where each just say they are renting their neighbors house (exchange mailbox keys, not door keys etc..) LOL.

not bad. can also provide divorce services w domestic partner agreements to avoid higher marriage tax, and get kids married to have them emancipated for financial aid for college.

it really is wrong that id pay a lot less if i could just get my wife to divorce me. just because we are married doesnt nean we should pay more since we could cohabit and contract all marital isdues

Submitted by scaredyclassic on November 2, 2017 - 6:48pm.

The-Shoveler wrote:
Actually, I think this might spur a new type of property management Biz,
Where two families get together to buy high end homes that they rent to each other LOL.
Come to think of it I don’t know why they are not doing this now, A lot more write off’s that way,
Or maybe they make an agreement where each just say they are renting their neighbors house (exchange mailbox keys, not door keys etc..) LOL.

not bad. can also provide divorce services w domestic partner agreements to avoid higher marriage tax, and get kids married to have them emancipated for financial aid for college.

it really is wrong that id pay a lot less if i could just get my wife to divorce me. just because we are married doesnt nean we should pay more since we could cohabit and contract all marital isdues

Submitted by Coronita on November 2, 2017 - 7:09pm.

The-Shoveler wrote:
Actually, I think this might spur a new type of property management Biz,
Where two families get together to buy high end homes that they rent to each other LOL.
Come to think of it I don’t know why they are not doing this now, A lot more write off’s that way,
Or maybe they make an agreement where each just say they are renting their neighbors house (exchange mailbox keys, not door keys etc..) LOL.

That would only work if you can expense your rent as a business expense somehow. You normally can't deduct rent unless you are really poor I think.

Submitted by SK in CV on November 2, 2017 - 7:27pm.

harvey wrote:

Pass-through income capped at 25% is a big win for top income earners. It will be interesting to see how many executives become consultants instead of employees.

It is not a tax cut for top income earners. Almost just the opposite. It is a tax cut for those with large amounts of capital invested.

This is a pretty complicated section of the law, as written. At least, if not more complicated than the §469 passive loss limitation rules that came in during the mid-80's. It appears that it won't lower tax for executives becoming consultants. It will lower tax for investors in big businesses structured as pass-through entities. It will only lower tax on investment income from operating businesses, not income from labor.

It won't lower tax for real small businesses. The plumber next door that wants to buy a 2nd truck and hire a 2nd crew, or a 10th crew, isn't going to get much benefit. Doctors, lawyers, consultants, real estate professionals, in private practice won't get any advantage. It is truly a capital over labor tax preference. Any politician who describes it as a tax break for small business owners is out and out lying. It is anything but that.

If passed, it will exacerbate income inequality. The rich will get richer. The workers will suffer. With all due respect to someone here who correctly hailed swamps as centers of life, this is the exact opposite of the draining of the swamp that Trump campaigned on.

Submitted by Coronita on November 2, 2017 - 7:37pm.

State tax deduction would be a big loss.

Mortgage interest deduction. I believe folks will be grandfathered if I am not mistaken.

I don't know if this would really make homes more affordable. Granted home prices might go down a bit, but most folks trying to get into a home for the first time would have much less disposable income to work with to...

Works great for people with a lot of money. I predict an exasperated gap between those who own multiple homes and those who will be close to lifelong tenants...especially considering the tax plan also calls the elimination of estate taxes. Now generations and generations of property owners can pass on their properties with very little tax consequences

Submitted by scaredyclassic on November 2, 2017 - 10:48pm.

you know, maybe its a message to cut back. at almost 50 state and fed tax over 260k, screw it, is it really worth working ones ass off.

maybe budgets need to set limits for when theceffort isnt worth it anymore. just say no to more

Submitted by harvey on November 2, 2017 - 10:54pm.

SK in CV wrote:

It is not a tax cut for top income earners. Almost just the opposite. It is a tax cut for those with large amounts of capital invested.

This is a pretty complicated section of the law, as written. At least, if not more complicated than the §469 passive loss limitation rules that came in during the mid-80's. It appears that it won't lower tax for executives becoming consultants. It will lower tax for investors in big businesses structured as pass-through entities. It will only lower tax on investment income from operating businesses, not income from labor.

It won't lower tax for real small businesses. The plumber next door that wants to buy a 2nd truck and hire a 2nd crew, or a 10th crew, isn't going to get much benefit. Doctors, lawyers, consultants, real estate professionals, in private practice won't get any advantage. It is truly a capital over labor tax preference. Any politician who describes it as a tax break for small business owners is out and out lying. It is anything but that.

If passed, it will exacerbate income inequality. The rich will get richer. The workers will suffer. With all due respect to someone here who correctly hailed swamps as centers of life, this is the exact opposite of the draining of the swamp that Trump campaigned on.

Maybe I'm misunderstanding the rule, but here's and example of what I thought this was about:

General contractor owns an LLC, brings in $300K net, pays himself $150K salary and takes the rest as pass-thru business income. Currently he gets taxed as if his total income were $300K, which would mean a 33% marginal rate for everything over $191K.

Under proposed rules his W2 income would be $150K and the other $150K would only be taxed at 25%.

I'm not sure where capital invested fits in, but maybe I'm oversimplifying something.

Submitted by Coronita on November 3, 2017 - 4:49am.

scaredyclassic wrote:
you know, maybe its a message to cut back. at almost 50 state and fed tax over 260k, screw it, is it really worth working ones ass off.

maybe budgets need to set limits for when theceffort isnt worth it anymore. just say no to more

Well, I am happy that a lot of people now understand what I have said all along.

W2 salaried upper income middle class always get screwed when it comes to any sort of tax reform.... For whatever reasons, politicians always like to think upper income salaried slaves are rich, meanwhile leaving corporations and the really rich alone.

Some folks keep saying how great Europe is... a lot of my colleagues are from Spain...they are here in the US because they complain how screwed up it is there. The poor or entitled crowd get a lot of free things. The rich pay less taxes. The middle class bears the majority of the tax burden. Meanwhile most of them can't afford housing. Home ownership concentrated among the wealthy. Well, it looks like we are turning into that system. Lol.

I don't have a problem paying more taxes if I earn a heck of a lot more money while doing a heck of a lot easier work....thankfully, that is the case i am currently in. And I also have to thank a few number of piggs, some of which are responsible for allowing me to build 1/3 of my net worth with much less effort than actually slaving away at a job. Thank you AN and sdrealtor. And then there are a few piggs that I have to thank for convincing me the path to earlier retirement is paying off a mortgage on a house that earns no money...thank you ucgal, wherever you may be.

This is pretty entertaining how foobared this is, and how messed up it's going to be for a lot of people inclusive. But hey, look on the bright side... Estate taxes are being eliminated, so now you can inherit a lot of new property and pass on a lot of property , and build generation of generation of property owners...think of feudal times when you have Lords and serfs, lol.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.