Califoia Sales Tax Deduction
12-22-2017, 01:36 PM
#16
SJW, a Carin' kinda guy
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The advice I am seeing is you can pay taxes in 17 due in 18, but whether the .gov allows it or not, remains to be seen. If somehow you are not paying enough property or income taxes and your sales tax is deductible, more power to you. Most people I know are just front loading state income tax payments.
Not a tax guy and not tax advice, and PS, the AMT changes and rate changes mitigate a lot of the losses in deductions subshooter. I was paying AMT before getting to deduct a penny in property tax for example. And PPS your home state may not have sales tax (it does, it just gets called something else like the registration fee on cars), but it has a terribly high income tax.
12-22-2017, 02:06 PM
#17
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Delaware's income taxes are not "terribly high". The highest bracket is 6.6%. There are 16 states (and DC) with higher rates. Property taxes are 1/2 of PA and 1/4th of NJ. The overall tax burden on individuals is 25/50 states. I'm not a fan of Delaware either - it is also extremely mismanaged. I am not defending it.
Sorry OP for the OT but I think you got your answers anyway.
12-22-2017, 02:34 PM
#19
Burning Brakes
My understanding is that the new law prohibits SALT prepayments. Most FL Counties won't accept property tax prepayments anyway.
The only "Solution" appears to be for everyone to become an LLC with their 21% Tax Rates and wide range of Expense deductions.
The rest of us in the "Middle Class" get screwed.
The only "Solution" appears to be for everyone to become an LLC with their 21% Tax Rates and wide range of Expense deductions.
The rest of us in the "Middle Class" get screwed.
12-22-2017, 02:52 PM
#21
Sure....but I was only using this example because I had specific knowledge of an individual's financial position in a high tax state. It get's worse the higher up the income bracket you go. Let's take a guy living in CA making over a million a year. Maybe he is itemizing and deducting SALT over 100k? Next year, he can deduct only 10k. A loss of $90k in deductions is not chump change even for him.
He also may own a $2 million+ home. Although he can deduct all of his interest on that home now and into the future (grand fathered), the next owner can only deduct mortgage interest on the first $750k. That is a loss of $50k of interest deductions (assuming 4% interest on a 2 million mortgage). Add that to the $90k of deductions lost already (assuming the new buyer has the same income) and he is going to get screwed on taxes. This will impact property values of expensive property in these states even if only on the margin. There can be no other result.
Obviously, the example above is rough with many assumptions and everyone's situation is different. But use many of the online calculators and they show that high earners in the high taxed states are going to lose. That is why the few republicans remaining in these states voted against the bill in the house.
He also may own a $2 million+ home. Although he can deduct all of his interest on that home now and into the future (grand fathered), the next owner can only deduct mortgage interest on the first $750k. That is a loss of $50k of interest deductions (assuming 4% interest on a 2 million mortgage). Add that to the $90k of deductions lost already (assuming the new buyer has the same income) and he is going to get screwed on taxes. This will impact property values of expensive property in these states even if only on the margin. There can be no other result.
Obviously, the example above is rough with many assumptions and everyone's situation is different. But use many of the online calculators and they show that high earners in the high taxed states are going to lose. That is why the few republicans remaining in these states voted against the bill in the house.
Not being able to deduct the 13+% CA state taxes nor the ~1.25% tax on the crazy property prices are huge impacts. The change to the upper brackets won’t come close to offsetting this for most.
12-22-2017, 02:58 PM
#22
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He also may own a $2 million+ home. Although he can deduct all of his interest on that home now and into the future (grand fathered), the next owner can only deduct mortgage interest on the first $750k. That is a loss of $50k of interest deductions (assuming 4% interest on a 2 million mortgage). Add that to the $90k of deductions lost already (assuming the new buyer has the same income) and he is going to get screwed on taxes. This will impact property values of expensive property in these states even if only on the margin. There can be no other result.
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That said, the wealthy in CA get destroyed with SALT repeal.
12-22-2017, 03:11 PM
#24
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Nah. 95% get a tax reduction. Seriously. Even though I may end up paying a bit more in tax, the stock market boom paid for it 30 times over.
The prior primary home mortgage interest deduction cap was on $1M of loan balance. For new mortgages, it moves to $750k. So not a massive difference, but still substantial.
Not being able to deduct the 13+% CA state taxes nor the ~1.25% tax on the crazy property prices are huge impacts. The change to the upper brackets won’t come close to offsetting this for most.
Thanks. I forgot about that and it does change my example to some degree but I agree that the reduction to the upper income bracket does not offset it in most cases. All the online calculators are showing the same thing.
Won't impact property values at all, outside of a very small subset. $1M to $1.5M homes will get hurt; everything else won't be touched. Unfortunately, in markets like coastal LA, this hits the exact people that are supposed to be protected........middle-middle class. To get homes in this value range is typically a long stretch for that family type, yet a necessity if you don't want children in bunkbeds in the master bedroom. $1.5M here gets you a 3 bedroom condo or a complete teardown.
That said, the wealthy in CA get destroyed with SALT repeal.
That said, the wealthy in CA get destroyed with SALT repeal.
Well, there are plenty of people with mortgages of 750k that are not in the top 1%. I think that club is around an income of $500k/year. Someone with 400k/ year can easily have a 750k mortgage. BTW - Are the GT3/GT3RS buyers the "average family"? LOL. I disagree with the bolded comment in your second. Everything is going to be more than OK. Watch. We are headed to 4% GDP.
12-22-2017, 03:16 PM
#25
Nah. 95% get a tax reduction. Seriously. Even though I may end up paying a bit more in tax, the stock market boom paid for it 30 times over.
Thanks. I forgot about that and it does change my example to some degree but I agree that the reduction to the upper income bracket does not offset it in most cases. All the online calculators are showing the same thing.
I agree....but the average GT3/GT3RS buyer is also a very small subset - probably the same subset. Totally agree with your last statement. It's not just CA either.
Completely agree with your first statement but are GT3/GT3RS buyers the "average family"? LOL. I disagree with the bolded comment in your second. Everything is going to be more than OK. Watch. We are headed to 4% GDP.
Thanks. I forgot about that and it does change my example to some degree but I agree that the reduction to the upper income bracket does not offset it in most cases. All the online calculators are showing the same thing.
I agree....but the average GT3/GT3RS buyer is also a very small subset - probably the same subset. Totally agree with your last statement. It's not just CA either.
Completely agree with your first statement but are GT3/GT3RS buyers the "average family"? LOL. I disagree with the bolded comment in your second. Everything is going to be more than OK. Watch. We are headed to 4% GDP.
12-22-2017, 03:22 PM
#26
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12-22-2017, 03:26 PM
#27
But, I believe you are correct about PROPERTY TAXES... and can pre-pay 2018 in 2017... while that tax is still unlimited.
12-22-2017, 03:32 PM
#28
12-22-2017, 03:43 PM
#29
[QUOTE=subshooter;14686409]
Nah. 95% get a tax reduction. Seriously. Even though I may end up paying a bit more in tax, the stock market boom paid for it 30 times over.
I'm a wealth adviser so totally realize that; many ways to use tax deferred and prefer d investments depending on the person and their needs. Just making statement to bring to light the waste in CA. The problem is in SAC.
Nah. 95% get a tax reduction. Seriously. Even though I may end up paying a bit more in tax, the stock market boom paid for it 30 times over.
I'm a wealth adviser so totally realize that; many ways to use tax deferred and prefer d investments depending on the person and their needs. Just making statement to bring to light the waste in CA. The problem is in SAC.
12-22-2017, 03:50 PM
#30
Sure....but I was only using this example because I had specific knowledge of an individual's financial position in a high tax state. It get's worse the higher up the income bracket you go. Let's take a guy living in CA making over a million a year. Maybe he is itemizing and deducting SALT over 100k? Next year, he can deduct only 10k. A loss of $90k in deductions is not chump change even for him.
He also may own a $2 million+ home. Although he can deduct all of his interest on that home now and into the future (grand fathered), the next owner can only deduct mortgage interest on the first $750k. That is a loss of $50k of interest deductions (assuming 4% interest on a 2 million mortgage). Add that to the $90k of deductions lost already (assuming the new buyer has the same income) and he is going to get screwed on taxes. This will impact property values of expensive property in these states even if only on the margin. There can be no other result.
Obviously, the example above is rough with many assumptions and everyone's situation is different. But use many of the online calculators and they show that high earners in the high taxed states are going to lose. That is why the few republicans remaining in these states voted against the bill in the house.
He also may own a $2 million+ home. Although he can deduct all of his interest on that home now and into the future (grand fathered), the next owner can only deduct mortgage interest on the first $750k. That is a loss of $50k of interest deductions (assuming 4% interest on a 2 million mortgage). Add that to the $90k of deductions lost already (assuming the new buyer has the same income) and he is going to get screwed on taxes. This will impact property values of expensive property in these states even if only on the margin. There can be no other result.
Obviously, the example above is rough with many assumptions and everyone's situation is different. But use many of the online calculators and they show that high earners in the high taxed states are going to lose. That is why the few republicans remaining in these states voted against the bill in the house.
ALL true.... and its clearly going to have an impact on property values in the high cost of living states.
Came across the following article in the Wall Street Journal which lists the highest taxed States, and the income level where the tax starts.
The gist of the article is that Governor's of these high tax states are gonna have to provide some tax relief (via lower taxes) otherwise there will be an exodus of the wealthy.
Of course "wealthy" is all relative. But who would have ever thought that a midwestern state like IOWA would be one of the highest income tax states, where the 8.98% starts for those making roughly $71,000 or more.
That's worse than living in New Jersey where roughly the same state income tax rate doesn't kick in until.... wait for it..... wait for it..... $500,000!
