Results 1 to 25 of 190
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12-30-2017, 08:04 PM #1
Home ownership in high SALT states
If price appreciation is non-existent, is there any reason for home ownership? Thoughts?
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12-30-2017, 08:11 PM #2
Can make it what you want. That’s worth something.
I wonder if it helps home prices closer to the cut line?
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12-30-2017, 08:13 PM #3
Rent is perpetual. A mortgage (hopefully) is not.
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12-30-2017, 08:14 PM #4
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.
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12-30-2017, 08:24 PM #5
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 appOriginally Posted by Smoke
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12-30-2017, 08:37 PM #6Registered User
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12-30-2017, 08:45 PM #7
Stability. That's all I got, but, it's a lot.
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12-30-2017, 09:12 PM #8Registered User
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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?
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12-30-2017, 11:04 PM #9
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.
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12-31-2017, 07:00 AM #10Registered User
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Thank god I got out of Illinois.
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12-31-2017, 07:29 AM #11
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.
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12-31-2017, 07:34 AM #12
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 can’t 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.
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12-31-2017, 07:59 AM #13
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?
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12-31-2017, 08:00 AM #14
No one wants higher taxes. Some are willing to pay them for the right reasons.
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12-31-2017, 08:29 AM #15
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12-31-2017, 08:33 AM #16
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 Ryan’s and other GOP members’ platforms? If not, then wake the fuck up.
The GOP will reduce Medicare and SS. They’ve already said so.
$1000/mo for 25 years of retirement is $300,000. $1500/mo is $400,000.
If GOP gets even halfway there it’s $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.
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12-31-2017, 08:37 AM #17
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
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12-31-2017, 09:14 AM #18
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.
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12-31-2017, 09:21 AM #19
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12-31-2017, 09:24 AM #20
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.
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12-31-2017, 09:27 AM #21
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 appOriginally Posted by Smoke
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12-31-2017, 09:35 AM #22
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.
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12-31-2017, 10:33 AM #23
I hope I’m wrong and you’re right. Math is alarming even if I’m 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!
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12-31-2017, 10:42 AM #24Funky But Chic
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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.
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12-31-2017, 10:43 AM #25
Got your attention, which was the point.
Even if the reductions to Medicare and SS are 10-12%, which is more feasible, that’s still a huge number for regular people.
Doesn’t 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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