Ok, The Donald Has Spoken Regarding Tax Cuts

Refund occurred only if the state tax is less than what you paid them. So if you paid exactly what you’re owned, no refund of state income tax occurred. That is to say, is not a zero sum event if you’re not allowed to deduct state income tax. Your disposable income would reduce.

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If these state taxes are not included in itemized, then primary home owners who pays less than $25200 mortgage interest can not use itemized as standard deduction is higher. This discourages primary ownership, almost less than 550k to 600k mortgages (assuming 4.25% rate).

Won’t use not cannot use :grin:, you can itemize if you wish to :smiley:
Cannot deduct means you shouldn’t borrow too much money to buy a house, I think is a good thing :smile: From what I read on this forum, many folks have borrowed to their teeth betting their farm that appreciation would continue ad infinitum.

Headwinds: Rate increase, no mortgage interest deduction, H1B EO…

Who says Trump will eliminate mortgage interests deduction?

And I bet the state tax deduction will stay as well. In the end all these so-called loopholes will stay as is.

That is an old news dated Mar 1. The recent 1 page implies otherwise.

From the White House itself, dated April 26, 2017:

https://www.whitehouse.gov/the-press-office/2017/04/26/briefing-secretary-treasury-steven-mnuchin-and-director-national

Q Thank you, Mr. Secretary. When you talk about the individual tax rates you’re also talking about eliminating some of the tax breaks. Are you talking about eliminating tax deductions? And which ones are you talking about eliminating, and which ones are you talking about keeping?

SECRETARY MNUCHIN: Correct, we are going to eliminate on the personal side all tax deductions other than mortgage interest and charitable deductions. We think that will be sweeping reform.

We(homeowners), who are NOT investors need the property tax deduction also!! :bangbang: :angry: :bangbang:

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But in order to deduct mortgage interest. you’ll have to itemize right and not take standard deduction
so if your mortgage is like 500k. that would be useless

Apple, Google, FB are sitting on tonnes of cash without investing them. Why would giving them more profits(hence more cash) encourage them to spend it on new businesses this time?
Recent experience shows that cutting taxes has only led businesses to buyback more stocks & fatten CEO pays.

<TRUMP RANT> :unamused:
Too bad, we don’t have the Chinese President equivalent to explain to Trump “how complicated” it(in this case taxes) are in 10 minutes. (Link below on what I am talking about). He’s doing the same on NAFTA.
Scarily, he is turning out to be exactly what I thought he would be during the campaign, actually worse i.e. Clueless, ignorant,incompetent & just lies all the time.
</TRUMP RANT>

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This means most BA low end primary owners screwed !

Here is the example. A family earns taxable income 125000/year (assume after IRA/401k)

The current standard deduction for a family is $12600.
They pay appx $8720 as state income tax.
They own a condo with $550000 loan at 4% interest rate. They pay $22000 as mortgage interest.

Current scenario (2017).:

Their itemized (simplified) comes to $22000+$8720 = $30720. However, standard deduction is $12600. They are allowed to deduct $30720 (as this is higher than standard deduction) from $125000.

Their taxable income is $94280.

After Trump tax implemented(2018):

The standard deduction is $25200. State tax is not considered in itemization(void). Their Mortgage interest is $22000.

Their taxable income is $125000 - 25200 = $99800.

A family rent a home, no mortgage, with same pay. They pay the same $99800 taxable income.

There is no point in paying mortgage interest for condo owners who pay less than $25200 mortgage interest.

High state income tax states like California and New York is getting affected.

High end earners, such a dual income in bay area makes appx 250k, they pay appx $20500 as state income tax which will not be allowed in itemized deduction as per Trump.

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https://www.yahoo.com/gma/treasury-secretary-steve-mnuchin-cant-guarantee-middle-class-113240550--abc-news-topstories.html

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Nationwide there is no sympathy for NY and CA…so a guy making a $100k has to pay another couple grand in taxes. …No sympathy from people in the Midwest making $40k or less…

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https://www.yahoo.com/news/press-secretary-comments-tax-plans-190454136.html

NY and CA has 50% Republicans too !

NY and CA high end earners loose state income tax deduction in itemized.

But, across america, the home price is low, esp less than $550k. Either they pay mortgage or they do not pay mortgage, both pay the same tax !

This means across country wiping off mortgage tax deduction…Raising Std deduction is good, but eliminating state income tax is not good for bay area earners as they pay high state income tax.

If property tax is still deductible it would make sense to raise that and lower income tax…But our state legislature has no sense…now worries…Just structure your income as business income and reduce your Fed tax to 15%…No matter what the Washington hacks decide, smart tax payers will adjust to lower their tax burden

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Without knowing the cutoff point for change in tax rate, we can’t conclude whether they are worse or better off. Savings from lower income tax rate might compensate for the loss of state income tax deduction.

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Any detailed analysis is futile. We don’t even know the tax brackets. One thing you can bank on is that Trump is dumb and Trump is lazy. He just wants a resemblance of a “win”, whatever that means. In the end I bet he won’t do the hard work of upsetting the status quo too much. That means all the deductions like state tax and mortgage interests will stay.

Don’t worry.

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Move to Austin, no state income tax :grin:

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Moving to a tax free state makes sense only if you get a similar income

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I agree 100% Trump won’t be able to move further. He just wants to show what he promised to people. Congress has to come to an agreement !

Look at his original plan

Still, corp tax may be around 20%, but all income tax deductions stay same !

Mostly Bay area only no matter what changes tax plan.

If I move, then it is seattle => Camas, WA, no state income tax, cross border, 15 mins drive, no sales tax !