Submitted by smurfyjenkins t3_y9veul in science
I am a homeowner (just bought this year and am going through all the first-year projects), so I get to deduct mortgage interest. Only homeowners get that benefit. Here's a list of essential expenses, shared by renters and owners, that I don't get to deduct from my income taxes: food, clothing, heating, transportation (in fact, I pay sales tax on most of those things). Yes, homeowners pay property taxes, but 1) those are often deductible on federal taxes, and 2) landlords' property taxes are baked into rent prices, so renters indirectly pay them too. And the really big one is that renters don't get to deduct their housing costs when doing income taxes!
So yes, as a homeowner, I do feel like the government is singling out people like me and subsidizing my housing expenses. I also feel like the government is putting its thumb on the scale and encouraging me to be an owner rather than a renter. Owning does have some benefits, but also some very big drawbacks--a big one being that as a homeowner, moving is a lot more expensive than a renter, so I'm less able to move in order to pursue better opportunities elsewhere. Another is that maintaining a home is a lot of work and money; I'm relatively handy and work hard at it now and am getting better, but I know my old landlord could do things more efficiently and cheaper than I can (so if I still rented, less time and money would be spent on home maintenance). Finally, because homeowners generally have more money than renters, these benefits are mostly going to reasonably well-off people.
Ideally everyone would be an owner, not a renter. Renting just moves wealth from the poor to the middle/upper class.
Everyone should have the option of owning, but not everyone wants that, depending on where they are in their career or stage of life. Frequent job hoppers prefer the flexibility of renting. Some young adults want to minimize their responsibility, and renting lets them avoid some of the pitfalls of ownership with the downside of having a smaller space. (Specifically thinking of a bachelor friend who has no intention of owning - he is currently content in his one bedroom unit, living a minimalist life. That may change if he ever gets married and has a family.)
The issue we're running into is that individuals who do want to own are now getting priced out, due to lack of affordable housing inventory. New construction isn't providing enough starter homes, and the lack of supply has driven the price of the first homes out of reach for those who are ready to settle down.
I don't see why you'd say that. Renting is just paying the landlord for their service of giving you housing...just like you pay the grocery store for the service of giving you food, or pay the clothing store for the service of giving you clothes. Not everyone needs to own a farm; it's ok to pay someone else for food, and it avoids having to tie up a huge amount of wealth in a farm. Not everyone needs to own a home; it's ok to pay someone else for housing, and it avoids having to tie up a huge amount of wealth in a home. It's a personal decision, where for a lot of people (especially people who move a lot, or don't like being responsible for home maintenance, or just want a small place that doesn't cost much) buying a house makes no sense at all.
If your argument involves the phrase "building equity", having your equity tied up in a house means you can't put it in the stock market (where it would probably do as well or better than a house) or even a business. There are lots of ways to invest money and a home is not necessarily the best.
I’m a homeowner. Haven’t been able to deduct mortgage interest in years.
>And the really big one is that renters don't get to deduct their housing costs when doing income taxes!
Yes, you can. We did this for years while renting and it is pretty explicitly called out on form 8829 and schedule c that you can do this. <- This is for business use only. Whether a homeowner or a renter, you cannot deduct typical housing costs unless part of your home is used exclusively for business use.
Don't be surprised if you are unable to deduct your mortgage interest or property tax. You must itemize to deduct either of these, and with the standard deduction now at $27.7k there is a good chance that your itemized deductions, even with mortgage interest, are less than your standard deduction unless you are early in your loan (which you are) and you are close to or above the principal cap. On top of that, the real estate tax deduction is combined with your state income tax deduction and both combined are capped at $10k (again, compare this to your standard deduction, which you would forgo by itemizing
Please correct me if I'm missing something, but 8829/schedule C is for business use only, if you use part of your home exclusively for work. Deducting your kitchen or bedroom's expense would be tax fraud. I've never heard of anyone legally deducting their rent on US federal taxes except for a home office used for nothing but work.
From the source:
>Use Form 8829 to figure the allowable expenses for business use of your home on Schedule C
Correct. Homeowners have to use part of their house exclusively for a business use in order to deduct their housing costs, outside of the itemized deductions specifically for mortgage interest and other taxes paid. You cannot deduct your mortgage principal, insurance, utilities, etc. otherwise.
Thanks. Could you please add clarifying text to your original comment, saying that this is for business use only? The vast majority of renters are not able to deduct any of their rent, and no renters can deduct all of their home's rent.
Yep, I added that. Thing is, the vast majority of homeowners are in the same exact boat as renters: they cannot deduct any of their housing costs either.
The mortgage interest and property tax deductions can only be taken by a small number of home owners and the business use deduction can only be taken for part of your home if you have an exclusive business use.
Viewing a single comment thread. View all comments