SENATE BILL: Residential Taxation Reform Act of 2014 (Law'd)

[DC Al Fine]

It's simple really. The interest deduction encourages people to take on too much debt. Replacing the interest deduction with a principal residence exemption from capital gains taxes is a much better way to encourage home ownership.

[DC Al Fine]

I agree that the deduction should be phased out, but I worry about removing it immediately and completely.  How will this affect people who are counting on it to be able to stay in their homes, or make their payments in other areas?  Is the capital gains exemption really a good substitute for that, to them?

How many people would actually be affected by this? Most people aren't savvy enough to increase their withholding if they're relying on the interest deduction.

My only fear here is, we'd create yet another housing bubble by encouraging house flipping, etc.

Possibly, but a capital gains exemption is too far off to affect the average Joe's mindset. An interest rate deduction is immediate.

FTR. This is more about eliminating the interest rate deduction more than anything else, so if someone wants to come up with an amendment, I'm open to compromise.

[DC Al Fine]

I agree that the deduction should be phased out, but I worry about removing it immediately and completely.  How will this affect people who are counting on it to be able to stay in their homes, or make their payments in other areas?  Is the capital gains exemption really a good substitute for that, to them?

How many people would actually be affected by this? Most people aren't savvy enough to increase their withholding if they're relying on the interest deduction.

I don't understand.  Who would need to increase their withholding? 

Sorry, I meant decrease.

As in: the average dude relying on the interest deduction is going to get the money back at tax time, not over the course of the year.

[DC Al Fine]

I agree that the deduction should be phased out, but I worry about removing it immediately and completely.  How will this affect people who are counting on it to be able to stay in their homes, or make their payments in other areas?  Is the capital gains exemption really a good substitute for that, to them?

How many people would actually be affected by this? Most people aren't savvy enough to increase their withholding if they're relying on the interest deduction.

I don't understand.  Who would need to increase their withholding? 

Sorry, I meant decrease.

As in: the average dude relying on the interest deduction is going to get the money back at tax time, not over the course of the year.

But doesn't the mortgage interest deduction benefit a person for as many years as they are paying the mortgage?

I'm not sure what you're arguing. Could you elaborate?

[DC Al Fine]

I'm not an expert on the nitty-gritty
So I'll leave all the details to my friends
Like Zell Miller and Mr. TNF,
And withhold judgment on this bill so far
Except to state that if you want
To sell a house, then do it on your own.
I don't see why the fed'ral government
Should subsidize the selling of your house.
Though please ignore me if I've made a fool
Of myself or my political views.
And one more thing. Sir DC, there's a flaw
In your autocorrect or spelling skills:
It's "principal" not "principle" when dealing
With items that are named as number one
Among their peers, like in this case a house.

[DC Al Fine]

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Sponsor: DC al Fine

Offering an amendment since most of the resistance is related to the capital gains exemption

[DC Al Fine]

What about A) placing an overall cap on deductions and B) grandfathering in those who have already taken out loans for the next, say, 20 years?

This would do something to limit how much extra benefit current homeowners receive without devastating their financial plans.

A is fine, but B is a bit much. Even if you're locked into a 30 yr mortgage, the interest load will be much less 10 years down the line.

As for shua's proposal I'm happy to stop subsidizing the rich's homes, but this proposal seems like it would recreate some of the sadder stories of the hosung bust as its even more encouragement to over-borrow.

[DC Al Fine]

If an amendment isn't forthcoming, I'd like to bring this to a final vote.

[DC Al Fine]

Hostile.

Will probably vote for the final bill if this is it, but I want to keep my version

[DC Al Fine]

Hostile to TNFs amendment as well.

[DC Al Fine]

Nay

[DC Al Fine]

Go for it.