Home mortgage interest deduction - Is it in DANGER?

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Okay I admit it, I cruise through talk radio stations (minus sports selections) while driving. Today, I had one hour in the car and Rush Limbaugh caught my attention (for at least 15 minutes) with his prediction that the home mortgage interest deduction is in danger of being eliminated by this administration. Hearing this and knowing how my business friends think, well - if I was a dog my ears would have been standing upright with my head cocked to one side!

He gave a synopsis that made sense. According to Rush the news today of how much our country is SPENDING, in giving tax deductions, is a signal that the administration would like to eliminate the POPULAR home mortgage interest deduction from the tax code. I immediately came home and googled my request and VOILA' , I see that there is merit to this prediction.

I have been wondering how long it would be before the tax code was overhauled to effectively raise taxes and now I know... it's just a matter of time before the interest deduction slips away into the night along with other beneficial motives to spend money in directed areas such as eduation. Here are some articles that might give you a bit more information about the changes coming down the pike and not just about the home interest deductions! These articles are about the changes coming in 2011

THE GREAT TAX DEBATE

Home Mortgage Interest Deduction: ezine article

RushLimbaugh.com (subscription)

Stack of Stuff Quick Hits Page

RushLimbaugh.com (subscription) - ‎6 hours ago‎

Get ready, 'cause they're gonna eliminate the mortgage interest deduction

Big tax changes in the works Student loan interest may affect thousands of families. Charitable deductions from IRA's. Many of the tax changes are listed here.

FANNIE AND FREDDIE: Future uncertain

THE HILL: Tax Cuts Mortgage

and there is more

Get Rid of Tax Breaks for Homeowners? No Way!

Video: News Update: Geithner: Housing system needs government support

SmarTrend News

Wonkbook: Geithner gives Fannie and Freddie clues; major health care regs ...Washington Post (blog)

Fannie Mae, Freddie Mac and Missing Real Estate Agents Housing Watch

Wall Street Journal

all 1,308 news articles »

Experts: US can no longer afford housing tax breaks

SO WHAT DO YOU THINK????? With talk of bailing out those with underwater mortages, tax hikes coming and the huge deficit - what are your plans? Which way should the country go? Do we still want to encourage home ownership?

Confused by your IRS obligation after foreclosure or short sale?

Please retweet this blogpost if you find it helpful in learning about government mortgage homeownership and bank loan modifications

Taxes and Foreclosures: Untangling the Mortgage Mess"> : "The Mortgage Forgiveness Debt Relief Act of 2007 allows taxpayers to exclude income from the discharge of debt on their principal residence. There is no dollar limit if the principal balance of the loan was less than $2 million ($1 million if married filing separately for the tax year) at the time the loan was forgiven. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for this relief.

This provision applies to debt forgiven from 2007, 2008 or 2009 (extended through 2012 by the recently passed Emergency Economic Stabilization Act of 2008). However, it is important to note that this change only applies to homes used as a principal residence. Debt forgiven on second homes, rental property or business property does not qualify for the new tax-relief provision.

Even though the forgiven debt is excluded from income, the amount of debt forgiven still must be reported (on Form 982). Clients should receive Form 1099-C Cancellation of Debt from their lender, showing the amount of debt forgiven or cancelled.

Issues and Considerations"

Of course, as with any legislation, >>>>KEEP READING FOR ISSUES

For FURTHER reading GO TO THE SOURCE: IRS

(click on links)

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable. The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition. More information, including detailed examples can be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17. The following are the most commonly asked questions and answers about The Mortgage Forgiveness Debt Relief Act and debt cancellation: What is Cancellation of Debt? If you borrow money from a commercial lender and the lender later cance>>>>>KEEP READING ON IRS.GOV

Its Capital Gains and Fear!

Why is it that Barack and Biden and overreacting to some tough questions that EXPERIENCED Joe Biden received? Heck, Palin had way worse thrown at her on SNL and still appeared on the show.

Is the BO machine so babyish that it can’t handle a fair question about statements that BIDEN recently made? I don’t now about you, but lately I am remembering a bunch of the way questions have been handled and sometimes they do okay, but mostly it seems like big baby machine crying that a legitimate fair respectful question is met with disdain and arrogance.

They didn’t get it when Joe the Plumber asked his question and disparaged him, they investigated him in fact – someone going through his DMV records. And with this last situation of a reporter asking Biden about Marxism and the sharing wealth, the Big O machine has said no interviews and chastised the station.

Seems local reports, Rick Warren and Joe the Plumber ask better questions than regular big wig reporters. Maybe media should do a better job overall. Maybe they are too caught up I trying to figure out how much an outfit costs rather than deal with more substantial things like is it okay for the BO machine to accept contributions from overseas without documentation of citizenship. Even Hillary much as I did not support her had standards that were good for America.

Doesn’t it concern anyone of the media that Europeans want to have votes in OUR election because of how it impacts the world and O courts them? For a while there I wondered if he were campaigning to be President of France for instance with all his overseas lovey dovey.

Don’t get me wrong I think we need to have strong allies, but catering and pandering are not the way to achieve that. My advice.. go to any donut shop or McDonalds’ early morning. Look around you and find a group of guys sitting around shooting BS and discussions on issues of the day.. .My guess is you just found a group of veterans’ and you will have some lively debates and learn a lot no matter what camp you come from.

I tell you that you might not see it now but some Dem’s are voting Republican because they don’t like the lying, socialistic stuff they see coming down the turnpike. They wil tell you people are scared of the capital gains increases coming with the BO change mechanism. Heck wouldn’t you want your stock back if you were going to lose 15% of its value to taxes? That’s on top of the 10% early penalty if you have to take it out early… so if you think you might need it early you’d better take it this year not next year.

For being so smart (they say) there is something fundamentally STUPID about a campaign that doesn’t get how capital gains affect every single WORKING INVESTING American. Your job might have matching program and all you can put in is $1.00 a week… may not be much but over time it adds up a little.

You can make 20K a year and still have funds in a 401K if you rolled it over from last higher paying job, or if it was a gift from granddad = facts are you are going to be penalized if you try to make your money work for you . Evidently the BO machine thinks the more you are penalized for making your money work for you, the better. He knows that it would be better to tax you on your smart money and spread it around to those more needy than you. Kind of crazy, huh?

Debate and TAXES

Two things they say are inevitable. Death and TAXES. I don't mind realistic taxes but Obama just doesn't seem to get it. He will be causes hardship on many Americans who are working hard to succeed, while incurring debt to do so, and planning on not only paying of that debt but enriching others by spending our hard earned income on luxuries like HELP. In other words I am not $227,000 today but ext year I might be. And next year the government will take 1/2 of that if Obama has his way.

As he said he wants to spread the wealth around. WELL when was the last time that ANY government agency did a better job of managing stuff than Joe Blow American.

The glibness of which he brushed off Joe the Plumber (shame on you Biden) is astounding. Has he just been in a bubble of wealth for too long to realize that small business makes JOBS not government and that it takes positive cash flow not taxes to do that????

Lets put it this way. You are a plumbeer and work really hard and exceed the 125,000-160,00 mark with your business. You hire your kid as apprentice and he is working his butt off too and now you are able to work a little harder and make it to the 185,000 - 190,000 mark after paying the kid. Meanwhile the spouse had to get a job to make ends meet and is earning 40,000 on the job plus 12,000 selling online. You are now magically (choke - try work butt off) in the range for 55-60% taxes depending on which model Obama finally settles on out of his vast array of models.

THIS BOTHERS me on so many levels I can't even figure out why my democratic friends haven't figure out the Robin- hood mentality that is being spoken out loud by OBAMA. Listen to the words. I don't' want to be indentured to the government.

Joe the Plumber is no laughing matter and the fact that Obama and Biden can't relate to him without the sneer is a sign of what we might be in for.

I think McCain did okay until the end. I don't' think he sold himself as well in closing as O did... but then do I want a used car salesman selling me the presidency or do I want to go by actions and plans. ?

Can you afford 50% tax?

Hey I'm still new at blogging so scroll to bottom and click ontaxman to listen to song while reading. :)

Well lets see; Obama says he will not increase taxes on families under 250,000, but some of his proponents have said it is 227,000 . Okay so which is it?

This week he wants to cut taxes TEMPORARILY, for Small Biz. Just a 5 months ago, he wanted to raise taxes up to 50.3% on businesses that are sole proprietorship. Of course this week he wants to be like Bill Clinton. One can only hope.

I'm kind of confused on where he stands but mostly it will be a 40% tax rate for sure. I guess in his mind that is a CUT because although it is higher than it is now, it is less than what he originally wanted? who know?

He further confuses me by saying this on his website
"Families making more than $250,000 will pay either the same or lower tax rates than they paid in the 1990s. Obama will ask the wealthiest 2% of families to give back a portion of the taxes they have received over the past eight years to ensure we are restoring fairness and returning to fiscal responsibility. But no family will pay higher tax rates than they would have paid in the 1990s."
One can only hope because in the 90's I was so broke and actually only paid 10%. 4 kids etc well this would be great..... I'll work my butt off make a million and only get taxed at my 90's rate? And since when did I receive taxes?????? his plan doesn't sound "fair" to me.

One note here: Our biz is sole proprietorship and makes far less than 250,000 (but we are growing) and have been working hard so that we can be successful... when we do, we have tons of debt to repay. That means, not only will we be paying interest, BUT we will be taxed on the debt incurred earlier.

and if you die its even more expensive ...... Here are some highlights.

• Restore 36 and 39.6 percent income tax rates.
• Restore personal exemption and Pease phaseouts for households making more then $250,000 and increase the threshold.
• Make permanent the estate tax with $3.5 million exemption ( that won't last) at 45 percent rate.
• Impose additional tax of 2-4 percent on families making $250,000 for social security/payroll.

He also has a couple good thing: invest in company up to 50K results in 20% tax credit. Right now we have that in the form of depreciating assets. I'll let the number crunchers figure it out but I always thought depreciating a laptop over years and years was stupid!

Of course coming up with 50K (like is that his fav number?)for investment can be difficult without credit. He wants to make sure that all have access to private health insurance regardless of preexisting conditions= good idea.

to recap:
40% for us work at homers and then another 2-4% for soc. sec .Further many dem's want a 50.3% tax rate heck that so only another 10% and heck if people vote in both democratic congress and democratic president - they just might get their way!

I want to mention here that in most families I know of sole proprietors, BOTH PEOPLE are working and sometimes the kids too are chipping in. Most are working long long hours. And could be making more working separately at jobs with benefits matching 401 contributions, partial health insurance payments and best of all paid days off .


Be careful what you wish for when you wish for change - I think these are some changes that will kill the economy. What do you think?


WANT TO SEE Some of the Changes?

One thing straight from Obama's site.
Eliminate capital gains taxes for small businesses, cut corporate taxes for firms that invest and create jobs in the United States, and provide tax credits to reduce the cost of health care and to reward investments in innovation. UH DUH small biz does NOT pay capital gains now

Now if you want to judge for yourself just click the title and it will take you to an article that outlines both tax plans and what they mean..

Resources
http://www.biztimes.com/news/2008/10/3/which-one-has-the-best-economic-plan
http://taxprof.typepad.com/taxprof_blog/2008/10/marginal-tax-ra.html