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  1. #1
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    Home ownership in high SALT states

    If price appreciation is non-existent, is there any reason for home ownership? Thoughts?

  2. #2
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    Can make it what you want. Thatís worth something.

    I wonder if it helps home prices closer to the cut line?

  3. #3
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    Rent is perpetual. A mortgage (hopefully) is not.

  4. #4
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    Nope. I easily pay over the $10K cap btw property tax and state taxes here in NYS. If my wife's mother didn't live here and need support we'd be gone.

  5. #5
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    It depends on rent vs ownership prices. (FWIW, I live in a state with no state income tax, low property taxes)

    I can rent a 50+ yr old house for $1250, or have a $1000/month mortgage (including property taxes).

    If prices are stagnant, in 20 months I break even on closing costs. I'm at 14 months as of next week. I think I can make it until June.

    Sent from my Moto G (4) using TGR Forums mobile app
    Quote Originally Posted by Smoke
    Cell phones are great in the backcountry. If you're injured, you can use them to play Tetris, which helps pass the time while waiting for cold embrace of Death to envelop you.

  6. #6
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    Quote Originally Posted by huckbucket View Post
    Nope. I easily pay over the $10K cap btw property tax and state taxes here in NYS. If my wife's mother didn't live here and need support we'd be gone.
    Ditto but it's the FIL.

  7. #7
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    Stability. That's all I got, but, it's a lot.

    Let's do some livin'
    After, we die

  8. #8
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    Even if you're over 10k on property tax alone, you're still fucked on the income tax deduction, so it's kind of a moot point and would boil down to if you could gain equity by owning.

    Could a person form a pass through and rent to themselves?

    I'm way over the 10k, but most of my income comes from pass throughs, so supposedly i'll pay less next year?

  9. #9
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    So many questions. Accountants were supposed to be eliminated by cheap software and simplicity, but, not anymore. They're going to busy little beavers for a while.

    Let's do some livin'
    After, we die

  10. #10
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    Thank god I got out of Illinois.

  11. #11
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    So even though I live in a 'liberal' state in the Northeast where everybody complains about high taxes, my wife and i are below the $10K by my calculations We 'own' a house.

  12. #12
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    A 30-year mortgage is a hedge against inflation. My abode will have the same payment until the mortgage is paid, and then will reduce to 0. Rents continue and may increase.

    That said, pick the one with the lower overall costs and force yourself to invest the savings.

    Or, if you canít do that, buying a home will force you to save by paying down the mortgage.

    GOP tax bill will cost me $100,000-$150,000 off the value of my home.

    When you combine that with an additional $6000/year in fed income tax due to loss of SALT deduction, and anticipated future reduction to Medicare and Social Security benefits that the GOP will pursue, my ultimate financial hit will be in the range of $550,000 to $700,000.

    SS and Medicare hit would be about $1500/mo from retirement to death.

    Is the difference between mortgage and renting greater than $1500/mo for the last 25 years of your life?

    If not, then you have way bigger financial issues to consider when you vote in November.

  13. #13
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    Fucking please. 1, you aren't going to lose 750k in net worth from the tax bill. 2, that's a whole bunch of hypotheticals. 3, if you are that loaded that if indeed it will cost you 750k, not that many people are going to feel bad for you. Don't liberals want higher taxes?

  14. #14
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    No one wants higher taxes. Some are willing to pay them for the right reasons.

  15. #15
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    Quote Originally Posted by Mazderati View Post
    No one wants higher taxes. Some are willing to pay them for the right reasons.
    Which is the reason that home values won't drop in high tax states, because, in most cases, it's all about the schools and services and social life that brings people there. I mean, do you really want your kids to go to school in Texas or Arkansas?

    Let's do some livin'
    After, we die

  16. #16
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    Quote Originally Posted by AdironRider View Post
    Fucking please. 1, you aren't going to lose 750k in net worth from the tax bill. 2, that's a whole bunch of hypotheticals. 3, if you are that loaded that if indeed it will cost you 750k, not that many people are going to feel bad for you. Don't liberals want higher taxes?
    Hey Genius - nice labeling but bad logic.

    The GOP just created a $1.5 trillion tax shortfall, which they will use to justify budget cuts.

    Feel bad for people who will get their Medicare and SS cut by 25%-30%.

    Have you read Paul Ryanís and other GOP membersí platforms? If not, then wake the fuck up.

    The GOP will reduce Medicare and SS. Theyíve already said so.

    $1000/mo for 25 years of retirement is $300,000. $1500/mo is $400,000.

    If GOP gets even halfway there itís $150,000-$200,000.

    My tax bill going up by $6000/year due to loss of SALT = $72,000 over 12 years.

    Home values will drop in high tax states because there is less incentive to buy. (Subject of thread) Estimated drop is 10%.

    Average home value in my hood is $1.1M (bought many years ago for far less) Estimated loss of value would be $110,000.

    Plan for the worst and hope for the best.

    You got an extra grand or two a month laying around to pay for your dotage?

    Argue all you want but ignore the GOP plan at your peril.

  17. #17
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    And even if there is a drop in 2018 there are desirable places people want to be and they will creep back up in value once people decide "fuck it" and get on living their lives.

    54-46, I would like to see the math to support your thoughts. Ask and you shall receive. Thx
    Quote Originally Posted by leroy jenkins View Post
    I think you'd have an easier time understanding people if you remembered that 80% of them are fucking morons.
    That is why I like dogs, more than most people.

  18. #18
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    Quote Originally Posted by 54-46 View Post
    Hey Genius - nice labeling but bad logic.

    The GOP just created a $1.5 trillion tax shortfall, which they will use to justify budget cuts.

    Feel bad for people who will get their Medicare and SS cut by 25%-30%.

    Have you read Paul Ryanís and other GOP membersí platforms? If not, then wake the fuck up.

    The GOP will reduce Medicare and SS. Theyíve already said so.

    $1000/mo for 25 years of retirement is $300,000. $1500/mo is $400,000.

    If GOP gets even halfway there itís $150,000-$200,000.

    My tax bill going up by $6000/year due to loss of SALT = $72,000 over 12 years.

    Home values will drop in high tax states because there is less incentive to buy. (Subject of thread) Estimated drop is 10%.

    Average home value in my hood is $1.1M (bought many years ago for far less) Estimated loss of value would be $110,000.

    Plan for the worst and hope for the best.

    You got an extra grand or two a month laying around to pay for your dotage?

    Argue all you want but ignore the GOP plan at your peril.
    Oh woe is poor you and your million dollar house. If the loss of salt is going to cost you 6k you are banking at least six figures a year.

    Liv already said it but if you have a million dollar house you are in a desirable area for a myriad of reasons, salt being the least of them.

    Again you are projecting a bunch of hypotheticals you know won't happen. 30 percent reductions in Medicare and SS aren't going to happen. You know this.

  19. #19
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    Quote Originally Posted by farmer View Post
    It depends on rent vs ownership prices. (FWIW, I live in a state with no state income tax, low property taxes)

    I can rent a 50+ yr old house for $1250, or have a $1000/month mortgage (including property taxes).

    If prices are stagnant, in 20 months I break even on closing costs. I'm at 14 months as of next week. I think I can make it until June.

    Sent from my Moto G (4) using TGR Forums mobile app
    If you're smart, you're also including the amortized value of a new roof, new furnace, new refrigerator, exterior paint and siding, driveway paving every few decades, etc., but I don't think you are.

  20. #20
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    250 a month probably doesn't cover it all, but on a 1000 a month mortgage most of it. 3 percent a year is the general rule of thumb for maintenance costs. Obviously the new roof years are more expensive, and some years it's basically zero.

  21. #21
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    Quote Originally Posted by Sirshredalot View Post
    If you're smart, you're also including the amortized value of a new roof, new furnace, new refrigerator, exterior paint and siding, driveway paving every few decades, etc., but I don't think you are.
    You're right, I'm not. The house is 2 yrs old. I don't plan to be in NV 10 yrs from now.

    Sent from my Moto G (4) using TGR Forums mobile app
    Quote Originally Posted by Smoke
    Cell phones are great in the backcountry. If you're injured, you can use them to play Tetris, which helps pass the time while waiting for cold embrace of Death to envelop you.

  22. #22
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    Out walking the pups, I was thinking about 54-46 comments. Here are my thoughts, living in a hood of multi million dollar homes.

    Old max interest deduction was based on a $1M loan amount and is now reduced to $750k, so BFD on that. New SALT write off limited to $10k, so lets assume the average buyer has a $200k annual income and buys a 2.5M property financing $1.5M. Property taxes ic CA would be about $27k annual, but now limited to $10k. So between the $17k lost there and maybe another $20k in state income taxes lets say that high rollin couple has $40k more in federal taxable income than in 2016. $40k at 28% is $11,200 more in taxes paid. Sucks, but not the end of the world.

    People will adjust and shit will be back to normal for the well off in a few years, based upon this simple analysis IMO.
    Quote Originally Posted by leroy jenkins View Post
    I think you'd have an easier time understanding people if you remembered that 80% of them are fucking morons.
    That is why I like dogs, more than most people.

  23. #23
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    Nov 2007
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    Quote Originally Posted by liv2ski View Post
    And even if there is a drop in 2018 there are desirable places people want to be and they will creep back up in value once people decide "fuck it" and get on living their lives.

    54-46, I would like to see the math to support your thoughts. Ask and you shall receive. Thx
    I hope Iím wrong and youíre right. Math is alarming even if Iím off by double.

    Loss of SALT deduction:
    Prop taxes/year - $12,000
    State income tax/year- $18,000
    SALT Deduction excluded: $20,000
    Increased taxes at 24% marginal tax rate: $4800 (.24 x $20,000)

    Mortgage interest deduction:
    House valued at $1,200,000
    Mortgage to new buyer would be $6391/mo on 80% loan ($960,000) at 4% interest.
    Homeowner unable to deduct interest on the $210,000 above $750,000
    Annual Interest on $210,000 would be $9000
    Marginal tax rate - 24%
    Tax increase due to loss of deduction is .24 x $9000 = $2160

    Annual tax increase due to combo of both of above items: $6960

    $6960/12 = $580/mo

    $580/$6391 = 9% increase cost per month

    There are factors to consider such as loss of personal exemption, loss of ability to deduct interest on HELOC, etc. that would offset lower tax rates. There is also loss of deduction for other state taxes, such as DMV fees, etc.

    Taxes:
    Increased taxes/year: $4800 (see above)
    $4800 x 13 years = $62,400

    Medicare:
    Current annual health care cost for retired persons: $18,000/year
    Medicare currently pays ~70%, or $12,600
    Principal pays ~30%, or $5400
    Cost/mo = $450

    Anticipated costs of health care by retirement: $24,000
    Assume Medicare reduced to 50/50 from 70/30
    Medicare pays $12,000
    Principal pays $12,000
    Cost/mo = $1000/mo

    At 30% to principal if Medicare benefit not reduced -> .3 x $24,000 = $7200
    $7200/12 = $600/mo

    Increase at 50/50 compared to current 70/30 system: $1000-$600 = $400/mo.

    $400/mo = $4800/year

    If you withdraw retirement savings at 4% rate per year, $4800 x 25 is $120,000.

    $120,000 additional retirement savings required.

    SS - assume 25% benefit reduction:
    Anticipated current benefit = $4000/mo
    Revised SS benefit = $3000/mo given 25% reduction
    Cost/year: $12,000
    Additional retirement savings required: $12,000 x 25 = $300,000

    It would make me feel better if my math is wrong. Have at it!

  24. #24
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    Well the first part seems correct enough, maybe there's details wrong, I don't know. You will be paying more taxes though for sure.

    The second part about Medicare is all speculative and while your math doesn't appear wrong it may not be relevant. Or it may be worse than you posit, who knows?

    All you can do is try to reduce costs and try to up savings and invest that money wisely and hope for the best. Considering downsizing the house would not be stupid.

  25. #25
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    Quote Originally Posted by AdironRider View Post
    Oh woe is poor you and your million dollar house. If the loss of salt is going to cost you 6k you are banking at least six figures a year.

    Liv already said it but if you have a million dollar house you are in a desirable area for a myriad of reasons, salt being the least of them.

    Again you are projecting a bunch of hypotheticals you know won't happen. 30 percent reductions in Medicare and SS aren't going to happen. You know this.
    Got your attention, which was the point.

    Even if the reductions to Medicare and SS are 10-12%, which is more feasible, thatís still a huge number for regular people.

    Doesnít matter if the exact number is wrong. Anyone out there have an extra $100-$200K saved up?

    I can sell and move to Italy and become a local like Benny.

    A bunch of folks who have $100,000 saved for retirement are voting to fuck themselves.

    Enjoy.

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