California renters will come out ahead with new tax plan while homeowners will see a higher tax bill

[steve2470]

http://www.doctorhousingbubble.com/gop-tax-plan-california-homeowners-renters/

You constantly hear that owning a home is a no brainer in California because you will always get major tax benefits. Well the new GOP tax plan is actually going to benefit California renters while California homeowners in crap shacks will see higher tax bills. It is an interesting tax proposal because the typical US household owning a typical $200,000 home is going to come out ahead. This is your bread and butter “American” family. However, Taco Tuesday Baby Boomers and Gen X’rs in California have been getting mega subsidies for buying hyper expensive crap shacks. Every tax bill that comes out seems to favor homeowners. In fact, I haven’t seen one that hasn’t favored homeownership. But the way the tax bill is setup, crap shack owners are going to actually have to pay more and renters are going to benefit nicely from the much larger standard deduction. We are now seeing some scenarios where this is playing out.

The L.A. Times has a piece where they examine various households in regards to the proposed tax plan. In one example you have a professional couple that bought a crap shack in Redondo Beach (3 bedrooms and 2 bathrooms – your standard million-dollar SoCal home). They paid $915,000 for the place back in 2016. They are going to see an increase in their tax bill:



So there goes the argument that every piece of legislation actually benefits homeowners. Not in this case and in many other cases where people over paid for crap shacks. But what about “poor” renters? There is another scenario presented in the L.A. Times with a professional couple that earns even more than the high income professional homeowner couple:





You mean the GOP and Trump are friends of California renters? Not that they care or even spend two seconds thinking about people in SoCal but the way this tax plan is setup, crap shack owners are the folks who will take it in the shorts the most. The top one percent is going to make out like bandits of course:

(have to stop due to DU rules)

[Eliot Rosewater]

1. Accident. The goal was harm blue voters, like allowing drilling off the coast, they hope there

will be a spill that will destroy California.

They are at war with us, trying to destroy us, i am hoping people realize this soon.

[Alpeduez21]

2. Rent will go up.

You watch.

[kysrsoze]

5. Bingo. Renters nearly always get squeezed...

and rents are sky-high. New 1 BR Marina Del Ray places are going to go for $4K/month.

[no_hypocrisy]

6. Rent *won't* go up. Here's why.

I'm renting my father's house to a minister and his family in NJ.

First thing I did after Trump signed the tax bill was to call my CPA. She said that the $10,000 SALT credit applies ONLY IF you live in the house you're paying taxes on. If you're renting a home, you can still take THE FULL DEDUCTION OF PROPERTY TAXES because it's investment property. So I won't have to increase the rent on my tenants -- and my landlord won't likely be (meaningfully) be raising my rent either.

[itsrobert]

8. Less incentive to buy homes

More renters competing for for rentals.

Supply and demand, rents go up.

[still_one]

3. Because they have eliminated the personal exemption, many of the people who currently

itemize deduction, especially in blue states or states with high property and state income tax, will realize no tax benefit, or actually be paying more taxes

[Hoyt]

4. I've heard both sides of the debate.

I'm one who wonders about the value of owning vs. renting.

In the end, I think the possibility of the increase in value -- above the considerable expense of maintaining a house -- and not having to answer to a landlord is worth it. The other side of the argument in my experience is that I'd rather just call the landlord and tell them to fix whatever is wrong than having to do it, or have it done, at my expense.

To most folks in California and similar states -- during this period of increasing home values and over the long haul -- housing values have increased so much that it greatly offsets the relatively small increase in taxes.

Truthfully, wealthier tax payers have had their interest and some other deduction capped for several decades.

Finally, I think the article is a bit dated -- before final Bill -- and just focuses on one aspect of the tax scheme.

[Lithos]

7. It's on purpose

They want to remove the one large asset available to the Middle Class - the homestead. That was one of the big dreams following WW2 - get out of the slums and Pottersville ghettos and into your own house.

L-