Speakeasy

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Well James, looks like you'll get your wish

by Roger NC / December 20, 2012 8:13 PM PST

You've stated it would be better to go over the "fiscal cliff" and both sides have done everything they can to arrange to do while blaming the other side.

So folks better hope you get coal for Christmas, you may have to burn it in a pot to keep from freezing come January and Feburary.

I sincerely think we all should get out for the primaries the next 10 years and make sure none of the current incumbents and wannabe president people every get to run in the main election again.

They are all as sholes.

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With so many of political bombshell threats
by Steven Haninger / December 20, 2012 8:23 PM PST

I need to wonder if this one is real or just another dud. I'd not be surprised if both sides wanted this and are already preparing to make further political hay out of it. We, the voting public, have become more stupid and more like sheep every day. I agree and have said so for a long time...it's past due that we throw the rascals out.

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With so many of political bombshell threats
by Magicorg / December 20, 2012 8:31 PM PST

You are right, whe are like sheeps Sad

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(NT) haha!...your "link" to yourself doesn't work
by JP Bill / December 20, 2012 8:49 PM PST
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It's an artificial "cliff"
by Josh K / December 20, 2012 8:58 PM PST

I'm not worried.

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what about the "cliff" worries people the most?
by James Denison / December 20, 2012 11:37 PM PST

Is it the deduction for mortgage interest?

Who won't be affected by that? I'd guess most people on welfare. Renters probably won't, many rentals are already paid for by the owners. Senior citizens for the most part probably won't miss it since most own their homes outright. The ones hurt the most are those in the prime working and earning years. Is that such a bad thing?

Is it higher taxes on some middle incomes?

Well, that's where the most income is produced.

I just don't see the "cliff" being as bad as everyone has been saying. What I do see is some sacred cows in the tax code abolished, at least for a while. Maybe it will finally shake things out enough for some real tax reform to come along later.

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RE: Renters probably won't,
by JP Bill / December 21, 2012 12:01 AM PST
Renters probably won't, many rentals are already paid for by the owners.

And many aren't?...IF the landlord can't deduct mortgage interest, do you think they'll eat the expense/ not pass it on?

Often, these benefits make the difference between losing money and earning a profit on a rental property. Here are the top ten tax deductions for owners of small residential rental property.
1. Interest

Interest is often a landlord's single biggest deductible expense. Common examples of interest that landlords can deduct include mortgage interest payments on loans used to acquire or improve rental property and interest on credit cards for goods or services used in a rental activity.
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mortgage interest deduction will not determine the rent
by James Denison / December 21, 2012 12:09 AM PST

If most rentals are already paid for, then those who are renting a place that's not paid for will have to compete against the rentals which are paid for and THAT will be the determining factor on whether they meet the same rent rates, or decide to sell the property instead.

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isn't mortgage interest similar to investment cost
by Roger NC / December 21, 2012 4:44 AM PST

and you generally don't think there should be taxes on investment returns, so should rental income be tax free too?

Donal would probably agree with that one.

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what I object to is....
by James Denison / December 21, 2012 2:55 PM PST

....people buying these 4-6000 sq ft McMansions and then deducting all the mortgage interest off their taxes. There should be some sort of limit on how much mortgage interest could be deducted if itemized, and not too far beyond the standard deduction. I'm in favor of medical deductions, because that's something that one can't really have complete control over, but buying a barn of a house is.

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I can agree, but what gets me on another angle
by Roger NC / December 21, 2012 10:57 PM PST

is people that say something like my mortgage interest is the only large tax deduction I've got.

They're not going to save as much in taxes as they pay in interest since all they save is the tax percentage of the interest, yet they actually hesitate to pay off the mortgage early because it's a tax deduction. DUH.

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I agree
by James Denison / December 22, 2012 1:58 AM PST

I take the standard deduction because my home is paid off. In fact in the final years of paying the mortgage I was able to quit itemizing and ended up saving money because it meant I also didn't have to account for state income tax refunds as returned income.

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my late wife and I bought this house in 2008
by Roger NC / December 22, 2012 3:08 AM PST
In reply to: I agree

mortgage at 6% for 20 years. I've never been able to deduct a cent of the interest.

Because the standard deduction for married couples, as well as others, was raised a couple of years before (I'm not sure of the exact year), I never had enough eligible expenses to make itemizing worthwhile even with the mortgage.

I'd doubt you save by not reporting state income refund as income since you didn't pay taxes on that money the year before, but when standard return is as good or better than itemizing, it's certainly simplier.

I've got to look up a few things with my wife's death and see if I want to hire a professional this year or not for my tax returns.

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RE: mortgage interest deduction will not determine the rent
by JP Bill / December 21, 2012 5:03 AM PST

It would if I was figuring out the operating expenses....

Every other rental in the area is rented and they are all mortgage free...You have 4 apartments for rent....You also have a mortgage interest deduction.....You don't take advantage of the surrounding market factors/supply and demand?...

Can you spell sucker? You should be able to...because you would be one. You're certainly not running a business...perhaps a charity.

You just finished paying your mortgage off?...you reduce the rent of your renters?

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Reduce the rent? Maybe yes but probably no.
by Steven Haninger / December 21, 2012 5:21 AM PST

It's when you've recovered your initial investment costs that profits can be made. When a manufacturer invests in a new product, the costs of engineering, production, etc., cannot be recouped until enough of the product is sold. Up until that time, they operate at a loss. If a rental property owner needs to compete with other properties that have lower expenses, he cannot make his rent higher to cover them. He must operate at a lower profit margin until he's paid his debt. Those who have paid their debts aren't lowering their prices either. This is business and not charity. It's how people make money. Maybe you gave your time away free or cheap and live on pork & beans but not everyone takes a vow of poverty.

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This is business and not charity.
by JP Bill / December 21, 2012 5:34 AM PST

Maybe you gave your time away free or cheap and live on pork & beans but not everyone takes a vow of poverty.


Don't bite my head off...James is the one that doesn't figure expenses/deductions into how to make a buck.

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Most homes, newly purchased then...
by James Denison / December 21, 2012 3:00 PM PST

...put on the rental market actually lose money for the owner. In the past that was done on the belief that the rise of property prices would compensate and resulting rise in rental rates would eventually catch up to the monthly PITI payments. That catchup period, could in past take 5-10 years before a breakeven point on monthly cost vs rent was reached. Currently that doesn't yet look like a good play in today's market until both the housing market and economy is stablized and recovering.

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PS - mortgage interest
by James Denison / December 21, 2012 3:03 PM PST

is a deduction on a primary home, one you are living in and purchasing. Rental property operate under a different tax method which computes cost vs rental income. See IRS Publication 527

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RE: mortgage interest is a deduction on a primary home,
by JP Bill / December 21, 2012 7:18 PM PST
In reply to: PS - mortgage interest
AND for landlords/rental property owners?

Every year, millions of landlords pay more taxes on their rental income than they have to. Why? Because they fail to take advantage of all the tax deductions available for owners of rental property. Rental real estate provides more tax benefits than almost any other investment.

Often, these benefits make the difference between losing money and earning a profit on a rental property. Here are the top ten tax deductions for owners of small residential rental property.

1. Interest

Interest is often a landlord's single biggest deductible expense. Common examples of interest that landlords can deduct include mortgage interest payments on loans used to acquire or improve rental property and interest on credit cards for goods or services used in a rental activity.
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I never considered the mortgage deduction much before
by Roger NC / December 21, 2012 4:43 AM PST

but when you do stop to think about it, why should there be a deduction for buying shelter and not for renting it?

Because that was something they wanted to encourage. More houses built, bigger houses built, more money spent.

A wage earner that rents (maybe be cause the work causes him to move a lot) still has the cost of providing shelter for the family just like the one that buys a house.

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Interest rates are so low right now
by Diana Forum moderator / December 21, 2012 5:08 AM PST

that it isn't a factor to most people.

Diana

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It creates another problem though
by Steven Haninger / December 21, 2012 5:24 AM PST

People can use cheap interest rates to buy more than they need. They'll pay more in taxes and maintenance later and will also have less in savings. A smart person would still remove the interest rate factor and buy only what they need and can take care of.

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McMansions may be a significant part of the problem
by Roger NC / December 21, 2012 11:47 AM PST

of course, since I'm single now I shouldn't need anything but a rented room right?

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I've always liked a big house (not a MacMansion)
by Diana Forum moderator / December 22, 2012 11:26 PM PST

but right now that all the family is gone, it's getting to be a drag.

Diana

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we bought this one, only 1350 sq ft for two of us
by Roger NC / December 23, 2012 1:17 AM PST

and 4 cats.

We were looking for something around this size, actually originally set the goal mark at 1500. Most were either over 2000 or as small as 1100.

My late wife said it's obviously the builder was a single guy, the kitchen is way too small, particularly on counterspace, and she hated to cook anyway.

I just wish it has a utility room built on the back in addition to the simple lay out it has. A room just big enough really for the water softner, water heater, washer, dryer, and maybe a deep sink.

My brother in law built a 3300 sq foot house for him, his wife, and one child. And it's a bit unlikely they'll add another child. Seems a bit much, but he can afford it so that's his business.

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(NT) They both want it and for it to be blamed on the other.
by Roger NC / December 21, 2012 4:40 AM PST
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the cliff gives both sides
by James Denison / December 20, 2012 11:30 PM PST

some of what they want, and seriously, it might be better than anything they've come up with yet. If nothing else, it will offer a stronger chance to simplify our tax issues in the future.

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the taxes are't going to be the bogeyman
by Roger NC / December 21, 2012 4:40 AM PST

everyone is looking at that.

It's not even the amount of the cuts, it's the demand for across the board, unflexibility, and cut good with the bad.

Pox on all of them, they're not representing the people interest, they're not even doing a decent job of representing their special interest interest.

They've adopted a mindset that this is an important principle for them (both sides) and not even caring a shet what happens to the majority of the population of the country.

Read one response to story on Yahoo news earlier today, wish I saved a link. One guy actually put forth some reasonable alternatives to such inflexible positions that raised taxes and cut spending.

Re it may be better than anything they've come up with......well duh, they haven't come up with anything but political maneuvering to make it all the other guys fault if it happens.

I wish everyone of them had to do work where they didn't sit on their a ss all day until the election for the average american income. Then I wonder how they'd vote.

Anyone seen any proposal to freeze the cost of living increases for Congress? indeed shouldn't as a gesture of leadership should the least thing they should have already done was passed a moratorium on congressional wage increases until the debt was below a goal? No, they want to freeze SS but not their sacred a sses.

He ll with all of them.

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Maybe the Mayan's had it right in predicting a disaster,
by Roger NC / December 21, 2012 11:46 AM PST

everyone called it quits on solving the problem today it seems.

But that's not a natural disaster, it's cold hearted cruelty to all who can't bribe, I mean contribute, enough to be represented.

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If the Mayan calender is a cyclic event, as some claim
by Roger NC / December 21, 2012 1:26 PM PST

and rather than apocalypse this is the beginning of a new cycle, could it be the Dawning of the Age of Aquarius? so long delayed from the 60's?

Harmony and understanding
Sympathy and trust abounding
No more falsehoods or derisions
Golden living dreams of visions
Mystic crystal revelation
And the mind's true liberation
Aquarius! Aquarius!

Hmmm, looking at the world, nope I don't think so. In fact, the opposite of each would seem more accurate, disharmony, deliberate misunderstanding, selfishness and self centerness, and absolute no trust. As far as no more falsehoods or derisions? give me break, that's most people's goal now.

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