# Tax deduction on mortgage interest being chopped **URL:** \ **Category:** Great Debates\ **Created:** [November 28, 2012, 3:56pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374 "2012-11-28T15:56:05Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [November 29, 2012, 1:37am UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/21 "2012-11-29T01:37:30Z")
> [@etv78](#): > > General ? about the mortgage deduction: Is it correct that the US is the only industrialized nation with this deduction? [Wikipedia](http://en.wikipedia.org/wiki/Home_mortgage_interest_deduction) says Belgium and the Netherlands have it too. It’s worth keeping in mind that the US housing market is very unlike that of other industrialized nations in that the US is sparsely populated compared to most. > [@Terr](#): > > In Manhattan it’s a 1-bedroom 1000 sq ft apartment. And that’s if you found a good deal (there are 500 sq ft apartments that go for $1M too). Fair enough, but I don’t think setting national policy based on what stuff costs in Manhattan really makes sense. ---
**Author:** ![Tamerlane](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tamerlane/32/7602_2.png) [@Tamerlane](https://boards.straightdope.com/u/Tamerlane)\ **Post date:** [November 29, 2012, 4:13am UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/22 "2012-11-29T04:13:38Z")
> [@Dangerosa](#): > > I didn’t know anyone with a middle class income and a $500k mortgage in the Bay or the Valley. Tenancies-in-common were becoming “common” around here pre-collapse, at least relatively speaking, ( they’re rare to impossible to obtain now ). Although fractionating the mortgages made them affordable ( i.e. a 500k home legally split by two people, so each is paying the mortgage for 250k ), I believe they’re still counted as a single mortgage. A rarefied case, but we’re talking about thousands of units locally. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 29, 2012, 6:42am UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/23 "2012-11-29T06:42:20Z")
> [@John\_Mace](#): > > Sunnyvale is right in the middle of Santa Clara County. Hardly the boonies. Try finding a home in Sunnyvale for \< $500k. Good luck! A condo maybe, but not many houses. When I moved here 16 years ago we looked at the school numbers and wanted to see Cupertino. The real estate agent showed us the houses we could afford - not many and not nice. I wasn’t joking about the shack - the one really reasonably priced house was a falling down shack on a hillside - slightly worse than the cabins I used to stay at in Boy Scout camp. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 29, 2012, 6:44am UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/24 "2012-11-29T06:44:32Z")
> [@Dangerosa](#): > > I used to work with “middle class” people in the Bay Area. They lived in the boonies - North or South or West - or somewhere like Milpitas or Sunnyvale. > > Real estate was still expensive. But even during the mortgage madness, I didn’t know anyone with a middle class income and a $500k mortgage in the Bay or the Valley. Define Middle Class. The people who bought the house next door are pretty much middle class. I don’t know what she does but he’s a tech writer, and that isn’t a super high paying job. I’d call them middle class. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [November 29, 2012, 1:22pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/25 "2012-11-29T13:22:18Z")
> [@Voyager](#): > > When I moved here 16 years ago we looked at the school numbers and wanted to see Cupertino. The real estate agent showed us the houses we could afford - not many and not nice. I wasn’t joking about the shack - the one really reasonably priced house was a falling down shack on a hillside - slightly worse than the cabins I used to stay at in Boy Scout camp. The Bay Area is insane. You pay $100k more for the same house across the street from its like because one sends your kids to a better high school. Cupertino and Palo Alto are two of those districts where you pay a lot more than if you choose Milpitas or Oakland, or the boonies (Ben Lomand or Gilroy). ---
**Author:** ![Throatwarbler\_Mangrove](https://avatars.discourse-cdn.com/v4/letter/t/8c91f0/32.png) [@Throatwarbler\_Mangrove](https://boards.straightdope.com/u/Throatwarbler_Mangrove)\ **Post date:** [November 29, 2012, 1:49pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/26 "2012-11-29T13:49:24Z")
> [@Tamerlane](#): > > Or the people who live in the SF Bay Area ;)? > > Probably won’t happen, but if such a plan is implemented some geographic adjustments might be reasonable. I love this idea that houses in the bay area aren’t real houses. You have a $500k house, that’s a thing worth a lot of money and you are a rich man. Just because your neighbors might have even more expensive houses doesn’t make you less rich. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [November 29, 2012, 2:08pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/27 "2012-11-29T14:08:13Z")
> [@Voyager](#): > > Define Middle Class. This is America. Everyone is middle-class. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [November 29, 2012, 2:13pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/28 "2012-11-29T14:13:22Z")
> [@Throatwarbler\_Mangrove](#): > > You have a $500k house, that’s a thing worth a lot of money and you are a rich man. Just because your neighbors might have even more expensive houses doesn’t make you less rich. If I had a $500K house, I’d sell it and retire. I could live better than the lifestlye I’m living now until Social Security kicks in, even if the proceeds don’t do better than inflation. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [November 29, 2012, 2:16pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/29 "2012-11-29T14:16:01Z")
> [@Throatwarbler\_Mangrove](#): > > You have a $500k house, that’s a thing worth a lot of money and you are a rich man. Just because your neighbors might have even more expensive houses doesn’t make you less rich. Not in a vacuum, no - but if house prices are high, then the cost of living generally in that area is probably also high. ---
**Author:** ![Throatwarbler\_Mangrove](https://avatars.discourse-cdn.com/v4/letter/t/8c91f0/32.png) [@Throatwarbler\_Mangrove](https://boards.straightdope.com/u/Throatwarbler_Mangrove)\ **Post date:** [November 29, 2012, 2:28pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/30 "2012-11-29T14:28:14Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Not in a vacuum, no - but if house prices are high, then the cost of living generally in that area is probably also high. “The cost of living” in an area become high because people who live there are rich. Rich people have more money and pay more taxes. That’s how it works. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [November 29, 2012, 2:39pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/31 "2012-11-29T14:39:28Z")
Or because the population density is high. ---
**Author:** ![Throatwarbler\_Mangrove](https://avatars.discourse-cdn.com/v4/letter/t/8c91f0/32.png) [@Throatwarbler\_Mangrove](https://boards.straightdope.com/u/Throatwarbler_Mangrove)\ **Post date:** [November 29, 2012, 2:53pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/32 "2012-11-29T14:53:23Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Or because the population density is high. Yep. If a large number of poor people migrated into your neighborhood tomorrow and raised the population density your neighborhood turns into the SF Bay Area. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [November 29, 2012, 2:53pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/33 "2012-11-29T14:53:46Z")
> [@Throatwarbler\_Mangrove](#): > > I love this idea that houses in the bay area aren’t real houses. > > You have a $500k house, that’s a thing worth a lot of money and you are a rich man. Just because your neighbors might have even more expensive houses doesn’t make you less rich. In most cases, the bank owns the house. We’re just paying off the mortgange. ---
**Author:** ![Throatwarbler\_Mangrove](https://avatars.discourse-cdn.com/v4/letter/t/8c91f0/32.png) [@Throatwarbler\_Mangrove](https://boards.straightdope.com/u/Throatwarbler_Mangrove)\ **Post date:** [November 29, 2012, 3:00pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/34 "2012-11-29T15:00:32Z")
So what? Are mortgages free to anyone who wants one? Is the bank doing you this service from the goodness of their hearts? ---
**Author:** ![Acsenray](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/acsenray/32/4519_2.png) [@Acsenray](https://boards.straightdope.com/u/Acsenray)\ **Post date:** [November 29, 2012, 3:15pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/35 "2012-11-29T15:15:24Z")
> [@Dangerosa](#): > > $500k is a lot of mortgage, and I’m not sure that the government should be in the business of subsiding mortgages for the upper middle class (or the wealthy). Around here, $500,000 is a standard single family house. Once you get below $300,000, you are talking about tiny places that are falling apart, with unreliable wiring and plumbing, without A/C, and full of mold and vermin. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [November 29, 2012, 3:23pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/36 "2012-11-29T15:23:56Z")
> [@Throatwarbler\_Mangrove](#): > > So what? Are mortgages free to anyone who wants one? Is the bank doing you this service from the goodness of their hearts? So what, what? I was responding to someone who seemed to think most of these people actually owned their homes. They don’t. Buying a $500k house doesn’t mean you own very much of it, even after 10 years of paying a mortgage, so it doesn’t make you rich. It just means you can afford the mortgage, with the accompanying tax deduction. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [November 29, 2012, 3:25pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/37 "2012-11-29T15:25:57Z")
> [@Throatwarbler\_Mangrove](#): > > Yep. If a large number of poor people migrated into your neighborhood tomorrow and raised the population density your neighborhood turns into the SF Bay Area. Large numbers of poor people don’t randomly migrate into neighborhoods. ---
**Author:** ![Dogzilla](https://avatars.discourse-cdn.com/v4/letter/d/e480ec/32.png) [@Dogzilla](https://boards.straightdope.com/u/Dogzilla)\ **Post date:** [November 29, 2012, 3:40pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/38 "2012-11-29T15:40:22Z")
> [@Voyager](#): > > Where I live if you have a $200K home you are either living in a garage or a one room shack. The standard 3 bedroom 1200 - 1500 sq ft house in my development, with a small yard, is about $500K. > > From an article in the Murky News this morning, it seems that most people don’t take the deduction since they don’t itemize, and that those who do make over $100K. Around here it will hurt, since most people buying new houses do take it. Maybe there should be some kind of sliding scale by zip code. > > One thing I saw proposed I’m very much for is the deductibility of home equity loans. They are dangerous things. They should still have lower interest rates if the borrower has enough real equity, but discouraging them is a good thing. And where I live, I have a standard 3BR/2BA home, which is almost 1300 sq. ft. The purchase price was just under $100K, in a nice middle/working class neighborhood in the middle of the city. If you have a $200K home, your rooms and your yard might be a little bit larger than mine and you might have a garage or nicer appliances inside. There isn’t much in this county that goes over $300K. I don’t understand why people are saying the mortgage interest deduction is only for the wealthy. Plenty of middle-class income people own homes and everyone I know who owns a house takes that deduction. It’s the only reason I itemize (I have basically nothing else to deduct). Losing that deduction would hurt me, a lot, and most people I know where I live would also feel a negative impact. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [November 29, 2012, 4:12pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/39 "2012-11-29T16:12:12Z")
If your home cost $200k, and you aren’t deducting much else, it will probably hurt you less than you think (even if they do away with it completely). I was quite surprised to discover the deduction for our similarly priced home wasn’t significantly more than the standard deduction - something like $300, I think. ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [November 29, 2012, 4:31pm UTC](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374/40 "2012-11-29T16:31:23Z")
> [@Really\_Not\_All\_That\_Bright](#): > > If your home cost $200k, and you aren’t deducting much else, it will probably hurt you less than you think (even if they do away with it completely). I was quite surprised to discover the deduction for our similarly priced home wasn’t significantly more than the standard deduction - something like $300, I think. 150K mortgage, 5% interest - that’s $7.5K in interest in a year. Even if your marginal tax rate is only 15% that’s $1125. [Previous page](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374.md?page=1) [Next page](https://boards.straightdope.com/t/tax-deduction-on-mortgage-interest-being-chopped/642374.md?page=3)