The devil is always in the details...voodoo tax policy strikes again.
http://www.dailyherald.com/search/main_story.asp?intID=38018163Bush tax cut backfires for many homeowners
Daily Herald Reports
Posted 2/1/04
It's a case of unintended side effects.
Last year's tax cuts - the ones we all love even though the money in our pockets was borrowed from our children - had an unintended side effect. The increase in the standard deduction for a joint return from $7,950 to $9,500 for 2003 and $9,700 for 2004 reduced the income tax burden on many couples. But it also reduced the benefit of homeownership deductions.
While one part of the tax code was reducing your tax bill, another part reduced the value of a beloved homeowner tax benefit. Funny how that happens.
(snip)
It means that most people, particularly those who buy houses without wine cellars or 24-seat media rooms, need to start correcting their Realtors about the tax benefits of homeownership. It means that many homeowners will find that the tax benefits of homeownership aren't all they're cracked up to be.
At the end of September 2003, the national median price for existing homes was $177,000. As I've pointed out in other columns, home mortgage and real estate tax deductions were once the mother's milk of homeownership. Today, they allow people who live in $100,000 houses to subsidize people who live in $400,000 condos.