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Opinion Editorials

The outrageous flaws of repealing the mortgage interest deduction

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Aerial view of a Pennsylvania neighborhood, original photo by daveynin.

100 year old tax deduction in danger

Every few months it seems as though the Mortgage Interest Deduction makes headlines as those readers of AG, and us in the real estate industry surely know.  With the budget crisis that was narrowly resolved in DC at the start of this month, again MID appears to be making another comeback.  NAR, the NAHB, who also has a site dedicated to protecting MID, called Save My MID, and other pro-homeowner groups will be lobbying for no changes to this sacred cow, this housing subsidy, that some call MID, which has been around for nearly 100 years.  Other groups will be advocating for lowering the max amount that MID can be applied to, nixing second homes, or perhaps, eliminating it altogether.

Most of us, as Realtors, do not moonlight as accountants, nor do we make a habit of studying tax policy. And some of us, (me) are really pretty bad at the whole numbers thing, anyway. It becomes extremely helpful when others are able to put figures into tables or charts. The Reason Foundation released a four page summary this month on why MID should be completely bounced from the tax code. While they are advocating for the repeal of the mortgage interest deduction, their summary is still very good. 

The New York Times recently published an article regarding MID too, showing a breakdown of who claims this deduction, as well as how people do support it, while saying it primarily benefits the wealthy, and younger homeowners. Both are informative, even if one is rallying against MID, as they use hard numbers from the IRS backing up their information.

Reacting to studies on the Mortgage Interest Deduction

A couple of their conclusions are complete Duh Moments, however. They say that younger and wealthier owners benefit the most.  Obviously younger owners are going to have more interest to deduct over a longer time than someone who has nearly paid off their mortgage, and owes mostly principal. Duh. 

What both articles classify as wealthy, is actually an irritating Duh Moment. Apparently filers who earn $75,000 or more are year are now “wealthy.” Uh, really? Me, and just about everyone I know are now rich? I had no idea! I could have sworn most of us live in middle-class houses, drive middle-class vehicles, and save up for middle-class vacations. 

Silly writers, why do you think we take advantage of the MID? If we’re are not out making major business related purchases every year, or do not have dependants, what other deductions do we have? *cough*  MID and property taxes. Imagine that, both are related to homeownership.

Looking beyond income brackets

Instead of looking at just income brackets, and who itemizes, as the articles above point out, have we ever thought about who may claim MID? Instead of wondering, I asked a longtime friend, who happens to be an accountant who said that wealthy tax filiers are going to have many more deductions overall, and probably benefit the most, true. But how our tax code is written, it allows pretty much everyone to claim the MID, if they are a homeowner. It does phase out part of the AMT, but most are entitled to claim it, no matter how they file, it just goes in different places on tax forms.

This is absolutely a simplified version of what Brett Thomas, my awesome accountant friend, shared, but it really puts into perspective that everyone who owns a home can benefit from the mortgage interest deduction. It is not just the mega rich, or those who are truly itemizing (think Schedule C) their taxes every year.

MID’s role in the rent vs. buy debate

The common claims, that MID allows owners to afford to buy more home than they otherwise could, or that values would decline and purchases to slow if MID were eliminated, may or may not be true.  I’m not smart enough to know that, and I don’t have a crystal ball in my bag of tricks. 

I do know, for a fact that MID was one of the main reasons I chose to buy, and way before my real estate career began. At the time, the price of renting was very similar to a mortgage payment, I’d be able to paint walls, hang pictures, would no longer have to haul my laundry elsewhere to be washed, and other awesome things, all without worrying about losing a security deposit. 

Most importantly, I’d be able to offset some of the marriage penalty I got smacked with and possibly not end up owing so darn much every year. Hey, it was buy a house or get a divorce, and lawyers are expensive, on a, ahem, middle-class income.

Katie Cosner, occasionally known as Kathleen, or KT, is a Realtor® with Cutler Real Estate and is active in her local Board of Realtors® on the Equal Opportunity & Professional Development Committee. She has been floating around online for a number of years, and is on facebook as well as twitter. While Katie has a few hardcore beliefs, three in the Real Estate World to live and die by are; education, ethics, and the law - insert random quote from “A Few Good Men” here. Katie is also an avid Cleveland Indians fan, which really explains quite a bit of her… quirks.

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24 Comments

24 Comments

  1. Joe Loomer

    August 10, 2011 at 6:06 am

    A large portion of the "young" filers don't even use their MID because they do not make enough or are not in a position to itemize. Pretty much every enlisted active duty military (below the rank of E8) falls in that category.

    Navy Chief, Navy Pride

    • Kathleen Cosner

      August 10, 2011 at 6:39 am

      Joe, it's not nec about itemizing, per se, like the self employed (us agents, for example, who use a Sched C) will do. There's a place on the 1040 for certain deductions, like property taxes and MID, but it may offset some by the AMT deduction. But it is still "claimable" (is that a word?) by people who don't "truly itemize" as we have come to think of it. Again, this is a super simplified explanation of how it works.

  2. Bruce Lemieux

    August 10, 2011 at 8:29 am

    Everyone wants a simpler and fairer tax code. Yet every deduction and loophole has a constituency ready to fight for its preservation — like the MID.

    The government does lots of things to encourage specific economic behavior which has resulted in a horrifically complex and unmanageable tax code. For me – as a home owner and real estate agent – I would be happy to see the MID go away *if* it accompanied a simplified federal tax at a lower rate.

    • Kathleen Cosner

      August 10, 2011 at 10:12 am

      Bruce, while I sort of agree, our tax code is insanely complex, and some things are rewarded, completely rewriting it and doing away with most deductions probably would take several lifetimes – we didn't get here overnight, afterall.

  3. Mark Jacobs

    August 25, 2011 at 8:40 am

    We don't need to rewrite just make it simpler

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Opinion Editorials

Strong leaders can use times of crises to improve their company’s future

(EDITORIAL) In the COVID-19 crisis, some leaders fumbled through it, while others quietly safeguarded their company’s future.

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Anthony J. Algmin is the Founder and CEO of Algmin Data Leadership, a company helping business and technology leaders transform their future with data, and author of a new book on data leadership. We asked for his insights on how strong leaders can see their teams, their companies, and their people through this global pandemic (and other crises in the future). The following are his own words:

Managers sometimes forget that the people we lead have lives outside of the office. This is true always but is amplified when a crisis occurs. We need to remember that our job is to serve their teams, to help them be as aligned and productive as possible in the short and long terms.

Crises are exactly when we need to think about what they might be going through, and realize that the partnership we have with our employees is more than a transaction. If we’ve ever asked our people to make sacrifices, like working over a weekend without extra pay, we should be thinking first about how we can support them through the tough times. When we do right by people when they really need it, they will run through walls again for our organizations when things return to normal.

Let them know it’s okay to breathe and talk about it. In a situation like COVID-19 where everything was disrupted and people are adjusting to things like working from home, it is naturally going to be difficult and frustrating.

The best advice is to encourage people to turn off the TV and stop frequently checking the news websites. As fast as news is happening, it will not make a difference in what we can control ourselves. Right now most of us know what our day will look like, and nothing that comes out in the news is going to materially change it. If we avoid the noisy inputs, we’ll be much better able to focus and get our brains to stop spinning on things we can’t control.

And this may be the only time I would advocate for more meetings. If you don’t have at least a daily standup with your team, you should. And encourage everyone to have a video-enabled setup if at all possible. We may not be able to be in the same room, but the sense of engagement with video is much greater than audio-only calls.

We also risk spiraling if we think too much about how our companies are struggling, or if our teams cannot achieve what our organizations need to be successful. It’s like the difference in sports between practice and the big game. Normal times are when leaders game plan, strategize, and work on our fundamentals. Crises are the time to focus and leave it all on the field.

That said, do not fail to observe and note what works well and where you struggle. If you had problems with data quality or inefficient processes before the crisis, you are not fixing them now. Pull out the duct tape and find a way through it. But later, when the crisis subsides, learn from the experience and get better for next time.

Find a hobby. Anything you can do to clear your head and separate work from the other considerations in your life. We may feel like the weight of the world is on our shoulders, and without a pressure release we will not be able to sustain this level of stress and remain as productive as our teams, businesses, and families need us.

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Opinion Editorials

7 sure-fire ways to carve out alone time when you’re working from home

(EDITORIAL) It can be easy to forget about self-care when you’re working from home, but it’s critical for your mental health, and your work quality.

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Woman in hijab sitting on couch, working from home on a laptop

We are all familiar with the syndrome, getting caught up in work, chores, taking care of others, and neglecting to take care of ourselves in the meantime. This has always been the case, but now, with more people working from home and a seemingly endless lineup of chores, thanks to the pandemic. There is simply so much to do.

The line is thinly drawn between personal and professional time already, with emails, cell phones, and devices relentlessly reaching out around the clock, pulling at us like zombie arms reaching up from the grave. Working from home makes this tendency to always be “on” worse, as living and working take place in such close proximity. We have to turn it off, though.

Our brains and bodies need downtime, me-time, and self-care. Carving out this time is one of the kindest and most important things you can do for yourself. If we can begin to honor ourselves like this, the outcome with not only our mental and physical health but also our productivity at work will be beneficial. When we make the time to do things we love, our mind’s gears slow down that constant grinding. Burnout behooves nobody.

Our work will also benefit. Healthier, happier, more well-rested, and well-treated minds and bodies can work wonders! Our immune systems also need this, and we need our immune systems to be at their peak performance this intense season.

I wanted to write this article because I have such a struggle with this in my own life. I need to print it out and put it in my workspace. Last week, I posted something on my social media pages that so many people shared. It is clear we all need these reminders, so I am paying it forward here. The graphic was a quote from Devyn W.

“If you are reading this, release your shoulders away from your ears, unclench your jaw, and drop your tongue from the roof of your mouth.”

There now, isn’t that remarkable? It is a great first step. Let go of the tension in your body, and check out these ways to make yourself some healing me-time while working from home.

  1. Set aside strict no-work times. This could be any time of day, but set the times and adhere to them strictly. This may look like taking a full hour for lunch, not checking email after a certain hour, or committing to spending that time outdoors, reading, exercising, or enjoying the company of your loved ones. Make this a daily routine, because we need these boundaries. Every. Single. Day.
  2. Remember not to apologize to anyone for taking this me-time. Mentally and physically you need this, and everyone will be better off if you do. It is nothing to apologize for! Building these work-free hours into your daily schedule will feel more normal as time goes on. This giving of time and space to your joy, health, and even basic human needs is what should be the norm, not the other way around.
  3. Give yourself a device-free hour or two every day, especially before bedtime. The pinging, dinging, and blinging keep us on edge. Restful sleep is one of the wonderful ways our bodies and brains heal and putting devices away before bedtime is one of the quick tips for getting better sleep.
  4. Of course, make time for the things you absolutely love. If this is a hot bath, getting a massage, reading books, working out, cooking or eating an extravagant meal, or talking and laughing with a loved one, you have to find a way to get this serotonin boost!
  5. Use the sunshine shortcut. It isn’t a cure-all, but sunlight and Vitamin D are mood boosters. At least when it’s not 107 degrees, like in a Texas summer. But as a general rule, taking in at least a good 10-15 minutes of that sweet, sweet Vitamin D provided by the sun is good for us.
  6. Spend time with animals! Walk your dog, shake that feathery thing at your cat, or snuggle either one. Whatever animals make you smile, spend time with them. If you don’t have pets of your own, you could volunteer to walk them at a local shelter or even watch a cute animal video online. They are shown to reduce stress. Best case scenario is in person if you are able, but thankfully the internet is bursting with adorable animal videos, as a backup.
  7. Give in to a bit of planning or daydreaming about a big future trip. Spending time looking at all the places you will go in the future and even plotting out an itinerary are usually excellent mood-boosters.

I hope we can all improve our lives while working from home by making time for regenerating, healing, and having fun! Gotta run—the sun is out, and my dog is begging for a walk.

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Opinion Editorials

The one easy job interview question that often trips up applicants

(EDITORIAL) The easiest interview questions can be the hardest to answer, don’t let this one trip you up – come prepared!

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Women sitting nervously representing waiting for a remote job interview.

A job interview is tough, and preparing for them can seem impossible. There are some questions you can expect: what is your experience in this position? How would you handle this situation? And so on.

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But what about this question: what makes you happy? Though it may seem straightforward, getting to the right answer is not such an easy path.

Work engagement

According to research, less and less employees feel like they are truly engaged at work. Some blame the work environment but truth be told, it is not a company’s responsibility to make you happy.

Without a passion for what you are doing, you will never enjoy the job.

It is the best case for everyone. More engaged workers are more productive in addition to feeling like they serve a purpose.

Do your due diligence

So before finding yourself in an interview where you have to take an awkward pause before answering this question, the best thing is to do some research. It all starts with the job search.

When looking for a job it is easy to get caught up in high profile company names and perks.

For instance, although “Social Media Coordinator” may not be your thing, the position is open at the cool advertising agency downtown. Or perhaps the company offers flexible hours and free lunch Fridays. The problem is that these perks aren’t worth it in the long run. Working for a cool company can be exciting at first, but it is not sustainable without passion for the position.

It’s important to pay attention to is the position you are applying for.

Is this work that you are passionate about? Take a look at the job responsibilities and functions. Besides figuring out if those are things that you can do, ask yourself if they are things that you want to do. Is this an opportunity that will match your strengths and give you purpose?

Let your passion protrude

With all things considered, when asked “what makes you happy” at the next interview, you will be able to answer honestly. Your passion will be apparent without having to put on an act.

Even if they don’t ask that question, there is no downside to knowing what makes you happy.

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