Should we eliminate the mortgage interest income tax deduction?
I say yes, for two reasons: 1.) We need the revenue. Obviously. 2.) Even more importantly, the government should not subsidize homeownership. The deduction inflates the the cost of housing to a degree. If you can't afford a house without the deduction, rent. There's no shame in it. Sometimes I wish I didn't have a house and rented myself.
Can someone explain an interest only home loan to me?
An interest only Home Loan is just that. You borrow a sum of money over a term, say twenty five years, pay interest only until the twenty five years is up and then pay the sum borrowed off. There are basically three ways y=to pay it off:- 1 Take out an endowment life assurance policy that pays the loan off if you die. If you don't the premiums are invested to give a lump sum after 25 years. 2 Pay it from savings 3 Sell the house and keep the equity. The problems with this type of loan is that any policy you take out may not provide enough to repay the loan. many policies have failed to do this and left hopeful purchasers with a debt at the end of the term. You may not have saved enough. You may not wish to sell your house. The best way is to take out a Repayment Mortgage since that way you can be sure the mortgage will be gone and the house yours in 25 years. Interest only loans are only recommended in certain circumstances. i.e. You are selling the house in a few years time. You have funds coming in that will repay the loan and you want to keep your costs down. Otherwise go for repayment.
Limitations on a Mortgage Interest Deduction?
I read part of the IRS Pub 936, but I think I'm missing something. As I (briefly) read it, as long as the value of the mortgage is less than $1,000,000 (married filing jointly) and it is used to buy my house, then my interest is fully deductible? So say I have a 30-year mortgage for $351,500 at a 4.5% interest rate. As I calculate it, I'll be paying $15,701.50 in interest for the first year. Would that be fully deductible since the Home Acquisition Debt limit doesn't apply to me? Seems like a lot to be able to deduct, so I assume I'm missing something.
India: I have a home loan with me as applicant and my wife as guarantor. Both the salaries were used to calculate the loan eligibility. Can the applicant and guarantor avail income tax savings under Section 80C and Section 24?
The Guarantors are not allowed to take any benefit of /section 80C whether they pay the loan or notThe primary condition for taking Section 80C benefits is that it can be claimed by the person who is actual owner of property plus he pays the loan or interestIn your case , since you applied for loan and your wife became the guarantor. In such case, only you will be able to take the tax benefit of the repayment of the principal amount and of the interest amount under the sections specified as you will be treated as the prime borrower Check out our detailed guide on Section 80C by clicking on below linkhttps://mytaxcafe.com/guides/tax...
How would eliminating the mortgage interest deduction influence home ownership for you?
A fairly big difference. I live in a “terminal home” area. Suburban, good schools, 5+ BR. We plan to sell in a few years when my wife retires. Local housing prices are still about 20–25% below the 2007 peak, and many sales are still short sales.The elimination of the interest deduction—especially in the face of rising interest rates—will make it far less likely that larger families will be able to afford to move up to my neighborhood. So prices will tumble. This is likely toSend me back to work—probably at WalMart or Home Depot. I started to see age discrimination in my job [STEM] about 15 years ago, so there’s not much opportunity there.Keep my wife working for another year or two.I’ll need to replan retirement with a more modest budget and perhaps move to a cheaper area.
In India, if a home loan is co-applied with a spouse and the spouse is made a 50% co-owner of the house, as per 2015-16 budget guidelines, what is the tax benefit under section 24 (interest paid against home loan)? Can both applicants claim 2 lakh separately, or is the combined limit capped at 2 lakh?
Both husband and wife can claim Tax benefit on a joint home loan if both are co-owners of the property. Tax benefits on joint home loan are summarised below. But I suggest that you go through this Joint Home Loan Eligibility & Tax Benefit Guide so that you don't miss out on any points.Tax deductions can be availed by husband and wife individually on both Principal payment (under section 80C) and Interest payment (under section 24) as per the following terms:1. Co-owners who have taken joint loan can claim tax deductions in the ratio of ownership in the property.2. Principal RepaymentMaximum tax deduction allowed is Rs. 1,50,000 (Rs. 2,00,000 for senior citizens) under section 80C of IT Act, subject to maximum limit of Rs. 1,50,000 across all investments under section 80C.Tax benefit for principal repayment is allowed only in case of a self-occupied house.Each co-owner can claim deduction of Rs. 1,50,000 individually on principal repayment.3. Interest RepaymentInterest repayment of home loan can be claimed under section 24 of IT Act under the head “Income from house property”.In case of self-occupied property, maximum deduction allowed towards interest repayment is Rs. 2,00,000 or actual interest paid in the year, whichever is lower.Each co-owner can claim deduction of upto Rs.2 lakhs individually toward interest repayment.In case, you have rented out your house, you can claim deduction on entire interest amount without any limit. However, you have to add rent income in your total income, in the proportion of your ownership.
How does a home equity loan work?
I need to know all the details and if it is a good choice. I have payed off my vehicle and credit cards and have none, but I have alot of student loan debt. Our dilema are the student loans. And paying them. I have heard about home equity loans and heard about being tax deductible. How do they work? Do they look bad on your credit? How much can you borrow ? Does it add to the years to pay off your house? We only have eleven years left to pay as it is right now. Just wondering what is a good option. I even thought that after I graduate and am working that my pay checks can go all to my student loans. I am just looking for some good ideas without having to stress out about debt and bills and such. We are trying to pay our bills off and so far have done good. But those student loans are looming in the background.