http://money.cnn.com/2005/11/01/pf/taxes/tax_proposals/index.htm?cnn=yes
what you guys think, i see a lot of stuff in the news lately about Real Estate and interest rates…as someone whos looking to begin investing will this effect me?
Short answer, Yes.
As interest rate rise, affordability lowers. In a free market when supply overcomes demand, prices will fall to meet demand. That will happen when interest rates go up. Cash is a good thing to have when interests rates creep up.
Well that should slow down the Nation…lets cut out the only Tax Break 70% of the American people get…Home Mortgage Interest…
To spin it in a positive way, as fewer and fewer people will be able to afford to own homes in a rising rate environment, the quality renter pool increases, as would rents.
So if you have some rental properties, they should become easier to fill at higher rents over the next 12 months.
*These are assumptions. I don’t know my you know what from a hole in the ground in terms of reality.
The new tax proposals won’t affect investors at all, because they aren’t going to happen. Congress controls the country because they control our money. Without all the tax loopholes, what’s the reason for special interest groups to “donate” money? Congress will kill these plans because then don’t want to lose their control over us and lose their donations from special interest groups. Therefore, this will never happen and we don’t be affected.
Mike
Propertymanager , good point. I actually thought the same thing but I thought I should do some research before I made that statement. I don’t think that the special interest groups are going to let congress cut the only deduction most of the Americans have.
Ramona,
It all evens out in the end. If people are paying $3000 a year with the deduction, they will be paying $3000 or less without the deduction. It’ll just be simpler to comply (and may cost less in preparation time and money). You can’t focus on a single line item and paint the entire picture with it.
Having said that, this is still a progressive proposal so anything is possible. And the tax code is what gives many politicians there power.
Not necessarily for each person, MIke…on the average - yes. Some of us have leveraged tax advantages as part of our overall investment strategy…some just blindly open their checkbook and write a check to the IRS each year.
Keith
You can’t write a tax code for each person.
I take that back, we did try to write one for each person and look what we have.
Either way, we would all have to make adjustments, and I’m sure things would have to be grandfathered or the entire system would collapse. A significant change would be politically and financially painful, no doubt.
Well, I believe that home ownership is the “sacred cow” of the tax code…it will only go if ALL deductions go…and we get a flat rate like we should have.
Keith
oops. i didn’t read the article, i thought we were talking about interest rates rising, not tax rates.