JFLNYC wrote:thephan wrote:JFLNYC wrote:While we’re on the subject of taxes, does Trump not realize that if he gets rid of the mortgage interest deduction the housing market will go into a tailspin?
I have always expect that WHEN he maneuvers this, that there will be an offset that is unimaginably favorable to real estate investors where rental properties would offset any profit in some way. Some sort of mixed depreciation where any income derived was just pure profit, and there would be negligible taxation on the property itself, or some other mind numbing, self serving thing.
As to the pending implosion of the mortgage market for private, citizen owned property to house something like a family, aside from it not being anything that Donald and his ilk care about, YOU will have to stand up a company and transfer your assets to it to maximize you ability to survive in a somewhat normal context.
Depending on the insanity of the tax plan, that might be your best option anyway. You employer pays your private company which owns all your assets. Your stipend would pay out at a low level shielding you. Good plan, right.
Before you consider doing something like that you should consult your accountant and/or attorney. Putting your primary residence in a corporation is pretty much universally viewed as a bad idea. First, you’d have to pay transfer taxes. Second, your mortgage company could call the loan. Third, you’d lose any homestead and any other exemptions granted to certain classes of individuals. And you’d lose your capital gains exemption when you sell. Then there are other issues, e.g., having to pay rent to the corporation. If you pay too much, the corporation could make a profit, which would be taxable. If you pay too little, the IRS could consider the difference between rent actually paid and market value as taxable personal income to you.
People buy more expensive homes knowing they can deduct mortgage interest. If the deduction were reduced or eliminated, millions would pay more in taxes (any increase in the standard deduction wouldn’t cover the difference) and the value of all those homes would decrease significantly overnight.
Only make sense if the tax code changes to something crazy. My accountant and I were what-iffing the 'how crazy could this be'. It is certainly not a now move, and I was by no means making a recommendation that people should explore this as a viable option. I think that current wealth threshold for this is like over $50M as viable. Only if corporations get all the benefits, and normal humans get all the screwing does it become of interests (and it is a way to save your friendly neighborhood accountant). So take no action now, just wait to see what happens next.
FWIW, if "you" (not sure who said it) think NAB is a powerful lobby, the mortgage bankers have superior horsepower to remain relevant, so I see no changes there. Its all scare tactics.
