The DMV is so insidious. They are allowed to tax used property sales.

That's a very good point. BUT, it's not the lotteries fault those people
can't control themselves.

 

I will, and while you're pouring gas in your gas hog, I'll keep on getting
35 mpg in my saturn. So, I guess it's all in how we decide to flush eh?

 

I hadn't checked the tax tables, but I knew a lot of folks paid little
if any federal taxes. Part of it depends on your definition of poor also.


Matt

 

What gas hog? At least I get something back for my gas money. And I
know exactly what I'm getting.


Matt

 

HAHAHA. I love watching you bush-loons go berzerk.HAHA

 

Wow... Is this really the way a "Loving Person" talks?

 

And that's precisely what this is. You have to pay for your housing no matter
what (unless you live in a cardboard box or underneath a bridge somewhere). So
if you apply your housing payment to a rental, you get no tax benefits, whereas
if you apply the same amount to a mortgage, you get to write off most of it as
interest.

 

The 2003 EPA mileage Guide list a compact Saturn Ion 4cy
automatic at 24/33 with an annual cost of $680. A midsize L200
4cy at 24/32 with an annual cost of $860 and a L300 4cy at 21/29
with an annual cost of $970. For comparison purposes a LARGE size
V8 Crown Vic automatic is listed at 18/26 with an annual cost of
only $192 more a year. That is less than 53 cents a day. Seems
to me that is hardly much of a saving considering the number of
passengers each can carry or the relative safety of a large
vehicle.


mike hunt

 

What's the difference between spending money you don't have on lottery tickets
and spending money you don't have on cars, boats, furniture, clothes, jewelry,
or any number of other things that people buy but cannot afford?

The problem is not lotteries, or even gambling. The problem is spendthrift
people, who overextend themselves, declare bankruptcy, and leave honest,
fiscally responsible people like you and me stuck paying off their bad debts
through higher taxes, interest rates, and fees.

If we would just throw these deadbeats in prison and make them pay restitution
through the money they earn by picking up garbage by the side of the road or by
making license plates, we'd all be better off.

 

Ain't that the truth. By buying a Saturn, you flushed at least $2000 - $3000 of
your hard-earned money down the drain (and into the dealer's pocket), thanks to
Saturn's "no-haggle" pricing.

 

Two obvious problems with your strategy:

1. It typically costs more to buy a similar property to what you can
rent. So, although you are building equity, you are often paying more
for the privilege.

2. You don't get to write off "most" of it as interest. Even the
current highest tax bracket gets you a 35% write-off. One third doesn't
count as "most" by any reasonable definition of the word. And few
people are in the 35% bracket; most are in the 15 or 25% range. This is
even farther from "most."

I'd be curious how you do your calculations to come to the conclusion
you stated. If you are talking about the fact that in the early years
of a mortgage, the lions share of your payment goes to interest rather
than principal, that is certainly true. But in those years you also
aren't building any equity and are really no better off than renting,
other than the 15% or so tax deduction. You are simply paying a lending
company rather than a landlord.

By the time you add on the additional costs associated with owning a
home vs. renting (maintenance, property taxes, etc.), the 15-25% tax
advantage is soon gone.



Matt

 

When I first moved to SoCal in 1995, I was paying $1400/month to rent a 1500SF
3-bedroom house. A year and a half later, I bought my first house, a 2200SF
4-bedroom; my mortgage payment was $1900/month. I was actually paying less per
square foot to own than I was to rent, even before factoring in the tax
benefits.

Even if you must pay more, it's always better to pay your own mortgage than to
pay your landlord's.

In the early years of a mortgage, the vast majority of your payment is interest;
relatively little of your payment is applied to the reduction of your principal.
All of that interest lowers your taxable income.

Looks like you figured it out - see below.

And that's all I was saying.

You're forgetting about this little thing called APPRECIATION. Using the same
example as before, the house I bought in 1997 for $317,000 sold for $525,000
4-1/2 years later. Even after you subtract the realtor commission and all the
interest I paid, I came out WAY ahead of where I would have been had I continued
renting that 3-bedroom house for another 4-1/2 years.

Whatever you say.

BTW, thanks to all the profit I made from my first house, I now own TWO houses,
and can write off the mortgage interest from both of them. I'm actually looking
forward to filing my taxes this year...

 

You write off the interest, i.e. deduct it form your earnings. The
tax deduction subsidizes your housing. It doesn't pay the full cost.

That is true only if houses are not appreciating. As a long term
trend they have always appreciated in the past and are likely to
continue to do so.

In other words, renting is inherently cheaper than buying? That
raises the question of why the government is subsidizing buying over
renting.

 

Well for one, it is apparently addictive for some people and at least
when you buy a car or a boat or jewelry you have something to show for
it at the end of the week.

Actually, one of the biggest causes of bankruptcy now is medical
bills. Add in unemployment, high housing costs and generally the fact
that many people are scraping by paying for essentials and you get a
better picture of why people declare bankruptcy. There are of course
examples of spendthrifts and addicts (including gamblers) who's habits
lead them to bankruptcy, but they are a minority.

I don't know about you, but my taxes and interest rates are generally
going down. My mortgage rate is below 5%. George Bush cut about
$3000 off my income tax and my rising income reduces the rate I pay
for Social Security every year. Not sure what fees you are concerned
about. I don't pay much in bank fees at all.

If you are carrying debt on your credit cards, you are certainly
paying a lot in general. If this describes you, you may be the next
'spendthrift' in bankruptcy court.

So the guy who couldn't pay his bills earning $15,000 per year at
WallMart; we're going to put this guy in a $50,000 per year jail cell
and credit his labor at $1.00 per hour (typical prison wages) to pay
off his debts? What other great plans do you "conservatives" have for
us?

Maybe we could just raise the minimum wage.

 

It's true that poor peole pay little or no Federal income tax. They
can even get an Earned Income Tax Credit that can get them a modest
return in excess of their withholding. Poor and even many low-middle
income wage earners pay more in Social Security than in Federal income
tax. That's why income tax is going down and SS is going up.

Which brings us to the point of poor not getting benefits. You can
argue that the government should not subsidize housing for the poor,
but it is then hard to argue that the government should subsidize
housing for the rich (mortgage interest deduction.) You absolutely
can not argue that subsidies for the poor don't make much difference.
For many families, that is all that is between them and the street.

Of course the latest proposal (from none other than Alan Greenspan)
isn't to cut housing subsidies, it's to cut SS benefits. Now they
aren't even pretending that this is to "save Social Security" but
rather it will be necessary to keep the deficit from going out of
control(!). So the poor are paying (too much) for a
retirement/insurance plan and we have to reduce the benefits of that
plan because the government needs the money after it gave big tax cuts
to the rich. Is this what Bush meant by 'compassionate conservatism'?

 

A grudging acknowledgement that you can't get blood from a stone.

 

Actually, it usually costs less per month; the trick is coming up with
the down payment.

You're misunderstanding -- unless you are subject to the AMT you can
deduct ALL the mortgage interest on a primary residence.

Not even close.

 

I understand completely, but interest is a deduction, not a tax credit,
so you don't save $1 in tax for each $1 in deducted interest. You only
save the $1 times your marginal tax rate.


Matt

 

Are you saying that you can't take your state income tax as a deduction
on 1040 Schedule A, Itemized Deductions?

Since when did that stop the bastards?
[/QUOTE][/QUOTE][/QUOTE]
Subscribe today to "Fire in the Hole - the Quarterly Journal
for Incinerator Toilet Enthusiasts" -- Andrew

 

It's not that hard - it just takes time. The real problem is most people have
trouble living within their means, much less far enough *below* their means in
order to accumulate liquid funds for use as a down payment.

I have a friend who moved to SoCal a couple of months after I did. He lived in
MD, where he owned a townhouse (which he sold). Eight years later, he still
lives in a rented house... but he has a brand new car, and a big screen TV.

For some, coming up with the down payment is much more than a trick...