Just been chatting with a fried who lives in NYC and says that in the US your PPOR mortgage interest is tax deductible. Crazy! How does that work? How does their govt afford it?
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PPOR mortgage interest tax deductible
- Thread starter luce.rocks
- Start date
Just another way in which the US property system differs from ours. This does encourage a lot of people in the US to constantly increase their mortgage which was in turn a contributing factor to their property crash.
Din't know about that one. Wow. Can't tell if I'm jealous or thankful.
None of these things can be created in isolation. e.g. to create 30 year fixed mortgages with no break fees, as the US has, you need the government to back up the mortgages.
The PPOR interest deduction looks great, but what if you had to pay 2% of the market value of your PPOR in property taxes each year? Or, for that matter, to have income tax at the Federal, State and sometimes Local levels?
The PPOR interest deduction looks great, but what if you had to pay 2% of the market value of your PPOR in property taxes each year? Or, for that matter, to have income tax at the Federal, State and sometimes Local levels?
They also pay land tax on the PPOR. (are they really fried?)
The days of the non-recourse loan in the USA are well and truly over. That was pre-GFC. US Treasury saw the end of the scheme that saw banks drop their losses onto Govt who bailed them out.
They look at us with Medicare, excise levies and taxes, age pensions and universal social security, regulated min wages, price controls, universal super and ask how we can run such a socialist economy.
Ditto we ask why a Corolla costs $24k here and just $17k in California.
Not many pensioners ask why the public hospital operation here is free.
They look at us with Medicare, excise levies and taxes, age pensions and universal social security, regulated min wages, price controls, universal super and ask how we can run such a socialist economy.
Ditto we ask why a Corolla costs $24k here and just $17k in California.
Not many pensioners ask why the public hospital operation here is free.
My understanding is that whether a mortgage is recourse or non-recourse depends on the statutes of the state where the property is. In fact there are different variations between states. I haven't heard of any of those laws being changed since the GFC.
Great topic.
I get frustrated with so called property economists / experts / UTS professors who "cherry pick" facts. So because the USA market failed then AUS will fail! Ignoring completely, either on purpose or ignorance, the many many factors that means you are comparing Apples with Zucchinis.
Want another one? Wife and I love France and we thought about buying a Paris apartment or country manor for rental and personal use. Prices are so low!!
BUt.... in a sale or even inheritance, the new owner pays CGT on the sales price/valuation. Can be up to 65%. So a manor in Loire valley on 10 acres costs say $600K but real cost could be over $1M.
And.... if you do rent it out and the tenants cannot ( aka decide to not) pay your rent, you cannot evict in winter due to the hardship.
Yet....if you rent for less than 6 months you don't pay any income tax. How they measure that is confusing to say the least.
FYI Peter 14.7
I get frustrated with so called property economists / experts / UTS professors who "cherry pick" facts. So because the USA market failed then AUS will fail! Ignoring completely, either on purpose or ignorance, the many many factors that means you are comparing Apples with Zucchinis.
Want another one? Wife and I love France and we thought about buying a Paris apartment or country manor for rental and personal use. Prices are so low!!
BUt.... in a sale or even inheritance, the new owner pays CGT on the sales price/valuation. Can be up to 65%. So a manor in Loire valley on 10 acres costs say $600K but real cost could be over $1M.
And.... if you do rent it out and the tenants cannot ( aka decide to not) pay your rent, you cannot evict in winter due to the hardship.
Yet....if you rent for less than 6 months you don't pay any income tax. How they measure that is confusing to say the least.
FYI Peter 14.7
Non-recourse loans are available in the U.S.
Purchase costs are 30-40% in France which helps explain why prices are low.
Watched a few episodes of "selling houses abroad" i think its called. People buy cheap houses with acres of land then find the government can buy it back for virtually nothing at any time, and build a hwy on it. Whole housing complexes crumbling down in Spain, not to mention entire abandoned cities. Paying for, in full, then building a house that at 90% complete the builder abandons and the owners find they don't legally own the home or land because its not finished and theres nothing they can do.
Some people spent their life savings on a "cave" house (literally a cave dug into a crumbly mountainside" that they suddenly found was too damp to live in and starting crumbling. Wow, that was an ending I didn't see coming, LOL.
When i get annoyed about QLD the "nanny state" - i think of this show.
Some people spent their life savings on a "cave" house (literally a cave dug into a crumbly mountainside" that they suddenly found was too damp to live in and starting crumbling. Wow, that was an ending I didn't see coming, LOL.
When i get annoyed about QLD the "nanny state" - i think of this show.
It's not comparing apples to zucchinis at all. The issues leading up to the GFC were systemic. It was like a virus that spread throughout most of the world's economy.
I personally believe that if we hadn't had the mining boom, we would have felt the full force of the GFC, the same as the U.S. and most of the rest of the West.
I would rather pay tax at the local level and have an effective system of government that can pursue policies at the local level than to pay tax "once" but have a federal government with a monopoly of power over the entire country. This is actually a rare system in most of the developed world.
Assuming policies are more effective when done locally. The US system also has a lot of inefficiencies as a result. e.g. since local governments pay for police, schools, etc out of local taxes, and local governments tend to be fairly narrowly defined, if you have an exodus of people to the suburbs, things deteriorate fairly rapidly. Detroit is an extreme example.
Arguably, the desire for greater tax revenue (tied directly to the number of homes) led local US governments to go crazy approving new developments, increasing the oversupply issue during the bubble.
The number of federal, state and local government departments also results in a lot of duplication, and more conflict between federal and states.
