I have not followed the entire thread so if I missed it I apologize
Has there been any discussion on moving your personal home to a LLC and renting it if you happen to live in a State and pay significant property taxes?
It seems like it might make sense but I was wondering if there is a downside.
It wasn’t discussed thoroughly. At the beginning, some people talked about it. As I recall, no one mentioned downside.
Don’t you wish it’s only one side. There would be hope. I put the wealth in DC to thriving lobbying industry. When I went to DC for the first time in 1980s, DC was a sleepy town. No one wanted to live there except around Georgetown. Thriving DC today scares me. I think I can hear the sucking sound of national wealth through lobbying. If we had data, we could do comparison chart, size of lobbying industry vs prosperity of DC.
Does Mr. Ryan have an elderly parent…who gets Medicare? Guess not.
I don’t like treating disasters differently. Losses from wildfires are no different than losses from hurricanes. Tornados, floods, earthquakes, they should all be treated alike for purposes of tax deductions.
I think the Senate version will prevail in most aspects keeping the medical deduction and not taxing grad students tuition waivers.
Paul Ryan’s mother is still alive. His father died when he was a teenager. If you’re interested in reading more about him, much is available online about his family background (deceased father, mother, wife, etc.).
@TatinG Is wildfire treated differently? Could it be because insurance covers fire but not flood in general?
I was talking about losses not covered by insurance.
Then I hope Paul Ryan is taking good care of his mom…because clearly, he is hoping to take away any assistance she earned from the federal government.
I think the house will pass the senate version…because there is too much at stake for the senate to vote again…and some “assurances” to get yes votes have not materialized for some senators. Hope those senators realize…they got stiffed.
I am not justifying the tax cut as written, but I did want to address the Medicare issue. People constantly bring up the issue of “I paid for my Medicare and deserve my benefits” or “I paid for Social Security and deserve my benefits”.
It is abundantly clear to the few people that look at this, that these programs are fiscal house of cards. The link I provide below suggests that only 36% of Medicare expenditures are actually financed by payroll deductions. The rest comes out other sources, the biggest being General Revenues (i.e. other taxes, primarily paid for by corporations or wealthy individuals).
https://www.kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing/
While much consternation is rightly made upon the low taxes on the wealthy, few people realize that the US has quite low taxes on the middle class relative to other developed countries. For example, Sweden has a top tax rate of 57% including payroll taxes. Importantly, this top tax rate goes into effect at 150% of the country’s average income. In contrast, the middle class in the US gets off easy.
https://taxfoundation.org/how-scandinavian-countries-pay-their-government-spending/
If we want Medicare for all, and I think we do, to pay for that from payroll deductions would require an increase from the current 2.9% tax (both employee and employer) to about 8% in order to be self-financing. The majority of the country would howl at that. Instead, they prefer their fiction of “I paid for this…”
@rockvillemom @swimcatsmom Good idea. I think I’ll go ahead and prepay Jan-Mar for this reason! I’m wondering if my bank will let me prepay only interest amount (apply to interest not principal), then pay principal as it comes due.
Paul Ryan received SS $$ between the ages of 16-18.
“Oh, so it matters if it’s DONORS who complain and not just all us constituents!”
In NYS property taxes on a $5 million dollar home is about $100,000/yr and the big donors here and elsewhere likely live in homes well north of that price. I don’t think the Senate adding in state & local taxes in the $10k allowable deduction is going to placate their rich donors. They also pay ginormous amounts in state income tax.
When the GOP wants to raise huge amounts of money they don’t go to Podunk, Flyover country - they go to NYC, LA and SF.
“I was talking about losses not covered by insurance.”
These huge wild fires occur mostly in blue states - that’s why you won’t be able to deduct losses when your house burns down.
Tornadoes happen in mostly red states and they weren’t given a carve out either.
@tom1944 -
This is probably not a legal arrangement. The IRS prohibits “self-dealing”, which this would seem to be. Plus, it would be considered personal use, which would limit what you can deduct.
But imagine if you could - this would essentially be subjecting yourself to a net imputed rent tax. While you would be able to deduct your property tax in this scenario, you will also be creating rental income, and paying income taxes on the rent you are paying yourself. You would legally have to charge yourself a market rent or close to it, which will almost certainly exceed the property tax.
You would have to depreciate your house, which would have tax advantages in the short term, but then you’d also have to recapture the depreciation and pay taxes on it when you sell it.
If your house was generating a loss, you might not be able to deduct the loss.
There is a yearly cost to having an LLC, both in yearly fees (depending on what state you are in) and in extra tax prep.
If you have a mortgage on your house, transferring/selling it to an LLC would make the mortgage due in full and you’d have to pay it off.
And if your house is owned by an LLC, when you sell it I don’t think you would be able to exclude $500K in gain like you can if you own the house and live in it long enough, because it’s not your house, it’s a rental as far as you are concerned.
I can’t see this making financial sense.
Disclaimer: IANATG (I Am Not A Tax Guy).
They will figure out a way to allow people in places like OK to deduct their loses and won’t do a thing when it’s CA, WA, OR disasters. Watch and learn.
It is a good thing LA, Santa Rosa, and parts of WA and OR burned this tax year. B-) Unfortunately, there is still something left to burn.
Bc put into words what I was trying to say. Thank you.
Paul Ryan got SS benefits as a youth and young adult and then fought his whole life to take them away from others.
I got SS once my dad became disabled until the end of high school. I can’t imagine doing anything other than fighting my whole life to make sure others get the same help we did.
Paul Ryan’s psyche is a place I dare not try to understand. He represents the district where I grew up. It includes the cities of Racine, Kenosha, and Janesville, none of which have booming economies.
So it seems clear that the GOP wants to go through reconciliation, based on the reports that they now understand the Senate Bill 's flaws, and they have released the names of the reconciliation committee. Floating the idea of changing the corp rate to 22 percent instead of 20, to help pay for some of it. This would annoy some members in the House stuck at 20, but it would still be a huge tax giveaway to the wealthy, so it would probably get through the House.
Has there been any comment from Collins, and maybe Corker, about whether or not they now understand they’d been lied to? If Collins says nope, they still could pass it with Pence as the tiebraker. But with Franken reportedly about to step away - and with the AL special election a week away, how long do they have before those seats are changed?
And Flake. He isn’t getting the DACA issue resolution he was promised either.
And Corker was a no anyway…right. Two more.