The 12th Commandment Posted March 3, 2009 Share Posted March 3, 2009 Don't landlords get a tax break which is passed on in terms of rent? Not sure if interest deductions apply to invesment property or not. Link to comment Share on other sites More sharing options...
sjinhan Posted March 3, 2009 Share Posted March 3, 2009 big plus for buyingn is that you are practically "freezing" your monthly housing cost at a particular number... if you rent, you always have to deal with rising rent prices.. Link to comment Share on other sites More sharing options...
TMK9973 Posted March 3, 2009 Share Posted March 3, 2009 Don't landlords get a tax break which is passed on in terms of rent? Not sure if interest deductions apply to investment property or not. Yes and no. From what limited thing I know there are three things. 1 -Deduction applies to a home - Not a apartment property. 2- You can only claim the deduction on 1 property. So if you own a house somewhere and also a second home you rent out, you can not take 2 deductions. You only get 1. 3- In addition - You have to live there 10% of the time if you want to claim it as a 2nd home, and therefore use the deduction. Having said all that, I belive that you can claim the interest of a loan on a rental property as a business expense. So you still get a break. Warning -I am not a accountent. But I did stay at a holiday inn express last night.... Link to comment Share on other sites More sharing options...
dcoles11 Posted March 3, 2009 Author Share Posted March 3, 2009 Do you strictly lease cars ? Not sure how this is even comparable. Link to comment Share on other sites More sharing options...
difleha Posted March 3, 2009 Share Posted March 3, 2009 Tax break isn't all that good as it used to be. You still have to pay it back when you sell the home. Depreciation recapture, anyone? Besides, there is more to just paying the mortgage. There are also maintenance fees, property taxes, insurance costs, property management fees, and you're just barely breaking even at most when you pay for that at the end of each month. Most rental properties out there are bleeding money in the short term, but you're still getting a good investment once that mortgage is paid off. Link to comment Share on other sites More sharing options...
mcsluggo Posted March 3, 2009 Share Posted March 3, 2009 Start with the basic premise - Does the government "OWE" someone tax breaks for either?Answer is no. (Before you get on do we owe the government taxes, the answer is yes. At least for infrastructure and safety). So then the question comes does the government have a incentive if people owning, rather then renting? Once again, the answer is yes. TON"s of studies show that people that own, stay in the house longer then those that rent (common sense). In neighborhoods where most people own, and less turnover, there is less crime. School dropout is lower. The upkeep is better. Less public services are needed. Schools are better with more community involvement. So, the government has a interest in people owning homes. The citizens are better off, and the government spends less. Therefore, the government, does what it can (such as tax breaks) for those that own. perfect, in a nutshell Link to comment Share on other sites More sharing options...
da#1skinsfan Posted March 3, 2009 Share Posted March 3, 2009 My wife and I had to weigh this same argument just recently as our lease on our apartment expired at the end of February. We looked at what we would pay for rent to move to Gaithersburg versus what we would pay for our mortgage. Our rent for the same size townhouse we ended up buying was about $1500-1600 a month. Our mortgage payment with taxes and insurance rolled in is $1720 a month but we also get a discount on our car insurance and with the tax deductions and the new first time home buyer credit, we are able to pay off our credit cards and a personal loan I had giving us an extra $200 a month. I also was able to adjust my pay check for 2009 and am bringing in an extra $400 a month. All that together made the decision quite easy as owning a home ended up being cheaper for us and we are not throwing money away any more on rent but we are investing it in our home. This is a very real example that should be highlighted for anyone making this decision. Factoring in paycheck adjustment due to tax breaks, rent vs mortgage, car insurance discount, 1st time homebuyer credit, etc. Well said. Link to comment Share on other sites More sharing options...
mcsluggo Posted March 3, 2009 Share Posted March 3, 2009 read Hernando De Soto's (the economist, not the explorer) books to go get the "party line" on the benefits to society of home ownership (The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else). His stuff is full of platitudes, over-simplification, and over-selling his points... but it is still good, easy to read, powerful stuff. Link to comment Share on other sites More sharing options...
TMK9973 Posted March 3, 2009 Share Posted March 3, 2009 Tax break isn't all that good as it used to be. You still have to pay it back when you sell the home. Depreciation recapture, anyone?Besides, there is more to just paying the mortgage. There are also maintenance fees, property taxes, insurance costs, property management fees, and you're just barely breaking even at most when you pay for that at the end of each month. Most rental properties out there are bleeding money in the short term, but you're still getting a good investment once that mortgage is paid off. Tax breaks on Mortage intrest do not have to be paid back....ever. There are fees with buying, no doubt. But you need to weigh in everything. Bought my first home in MD in 2000. That was smart. Bought a house in Texas in 2003. NOT smart. Rented in CA in 2005... SMART. Bought a house in VA in 2008, Jury is out.... Link to comment Share on other sites More sharing options...
Madison Redskin Posted March 3, 2009 Share Posted March 3, 2009 I don't think the mortgage interest deduction is a good thing, even if it is a sacred cow. Link to comment Share on other sites More sharing options...
difleha Posted March 3, 2009 Share Posted March 3, 2009 Tax breaks on Mortage intrest do not have to be paid back....ever.There are fees with buying, no doubt. But you need to weigh in everything. Bought my first home in MD in 2000. That was smart. Bought a house in Texas in 2003. NOT smart. Rented in CA in 2005... SMART. Bought a house in VA in 2008, Jury is out.... I'm almost sure you have to pay back the mortgage interest. Although, I could be wrong about that. Link to comment Share on other sites More sharing options...
Madison Redskin Posted March 3, 2009 Share Posted March 3, 2009 Tax break isn't all that good as it used to be. You still have to pay it back when you sell the home. Depreciation recapture, anyone? Dude, over the last two years, I've gotten about $9,000 in tax breaks thanks to that mortgage interest deduction. Link to comment Share on other sites More sharing options...
TMK9973 Posted March 3, 2009 Share Posted March 3, 2009 I'm almost sure you have to pay back the mortgage interest. Although, I could be wrong about that. You are. It's also extremely valuable. Through in the deduction of property taxes and it saved me $8600 in taxes this year alone. You are confusing the 1st time home buyers credit from last year (Which does have to be paid back) with the mortgage interest tax deduction. Link to comment Share on other sites More sharing options...
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