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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

9 ways to be more LGBTQIA+ inclusive at work

(OPINION EDITORIALS) With more and more people joining the LGBTQIA+ community it’d do one well to think about ways to extend inclusiveness at work.

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LGBTQIA+ people may have won marriage equality in 2015, but this momentous victory didn’t mean that discrimination was over. Queer and LGBTQIA+ identified people still have to deal with discrimination and not being in a work environment that supports their identities.

Workplace inclusivity may sound like the hottest new business jargon term on the block, but it actually just a professional way of making sure that everyone feels like a valued team member at the office. Business psychologists have found when people are happy to go to work, they are 12 percent more productive.

Making your business environment a supportive one for the queer community means you’re respecting employees and improving their workplace experience.

Here’s nine ways you can make your workplace more inclusive for LGBTQIA+ people.

1) Learn the basics.
If you’re wanting to make your workplace more open to LGBTQIA+ people, it’s best to know what you’re talking about. Firstly, the acronym LGBTQIA+ stands for Lesbian, Gay, Bisexual, Transgender, Queer, Intersex, and Asexual and the plus encompassing other identities not named; there are many variants on the acronym. Sexual orientations (like lesbian, gay, bisexual) are not the same as gender identities.

Transgender means that that person “seeks to align their gender expression with their gender identity, rather than the sex they were assigned at birth.” Cisgender means a person identifies with the sex they were assigned at birth. If you need a more comprehensive rundown about sexual orientation, gender identity, and the like, visit the GLAAD reference guide.

2) Stop using the word “gay” as an insult.
Or insinuating people you don’t like are “gay” together. This is the most basic thing that can be done for workplace inclusivity regarding the queer community. Anything that actively says that LGBTQIA+ people are “lesser” than their straight counterparts can hurt the queer people on your team and make them not feel welcome. It’s not cool.

3) Don’t make jokes that involve the LGBTQIA+ community as a punchline.
It’s not cute to make a “funny quip” about pronouns or to call someone a lesbian because of their outfit. This kind of language makes people feel unwanted in the workplace, but many won’t be able to speak up due to the lack of protections about LGBTQIA+ identities in anti-discrimination statutes. So stop it.

4) Support your colleagues.
If you’re in a situation and hear negative or inappropriate talk regarding the LGBTQIA+ community, stick up for your co-workers. Even if they’re not there, by simply expressing that what was said or done was inappropriate, you’re helping make your workplace more inclusive.

5) Avoid the super probing questions.
It’s okay to talk relationships and life with coworkers, but it can cross a line. If you have a transgender colleague, it’s never going to be appropriate to pry about their choices regarding their gender identity, especially since these questions revolve around their body.

If you have a colleague who has a differing sexual orientation than yours, questions about “how sex works” or any invasive relationship question (“are you the bride or the groom”) is going to hurt the welcomeness of your office space. Just don’t do it.

6) Written pronoun clarity is for everyone!
One thing that many LGBTQIA+ people may do is add their pronouns to their business card, email signature, or name badge for clarity. If you’re cisgender, adding your pronouns to these things can offer support and normalize this practice for the LGBTQIA+ community. Not only does it make sure that you are addressed correctly, you’re validating the fact that it’s an important business practice for everyone to follow.

7) Tokens are for board games, not for people.
LGBTQIA+ people are often proud of who they are and for overcoming adversity regarding their identity. However, it’s never ever going to be okay to just reduce them to the token “transgender colleague” or the “bisexual guy.”

Queer people do not exist to earn you a pat on the back for being inclusive, nor do they exist to give the final word on marketing campaigns for “their demographic.” They’re people just like you who have unique perspectives and feelings. Don’t reduce them just to a token.

8) Bathroom usage is about the person using the bathroom, not you.
An individual will make the choice of what bathroom to use, it does not need commentary. If you feel like they “don’t belong” in the bathroom you’re in due to their gender presentation, don’t worry about it and move on. They made the right choice for them.

An easy way to make restroom worries go away is creating gender neutral restrooms. Not only can they shorten lines, they can offer support for transgender, nonbinary, or other LGBTQIA+ people who just need to go as much as you do.

9) Learn from your mistakes.
Everyone will slip up during their journey to make their workplace more inclusive. If you didn’t use the correct pronouns for your non-binary colleague or misgender someone during a presentation, apologize to them, correct yourself, and do better next time. The worst thing to do is if someone corrects you is for you to shut down or get angry. An open ear and an open heart is the best way to make your work environment supportive for all.

The workplace can be a supportive environment for LGBTQIA+ people, or it could be a hurtful one, depending on the specific culture of the institution. But with some easy changes, it can be a space in which queer and LGBTQIA+ people can feel respected and appreciated.

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Opinion Editorials

“Starting a business is easy,” said only one guy ever

(OPNION EDITORIAL) Between following rules, finding funding, and gathering research, no business succeeds without lifting a finger.

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While browsing business articles this week, I came across this one, “Top 10 Business Ideas You Can Start for Free With Barely Lifting a Finger.” These types of articles make me mad. I can’t think of many successful freelancers or entrepreneurs who don’t put in hours of blood, sweat and tears to get a business going.

The author of the article is Murray Newlands, a “VIP Contributor.” Essentially, he’s a freelancer because he also contributes to Forbes, HuffPro and others. He’s the founder of ChattyPeople.com, which is important, because it’s the first business idea he promotes in the article.

But when I pull up his other articles on Entrepreneur.com, I see others like “How to Get Famous and Make Money on YouTube,” “Win Like A Targaryen: 10 Businesses You Can Start for Free,” and “10 Ventures Young Entrepreneurs Can Start for Cheap or Free.”

I seriously cannot believe that Entrepreneur.com keeps paying for the same ideas over and over.

The business ideas that are suggested are pretty varied. One suggestion is to offer online classes. I wonder if Newlands considered how long it takes to put together a worthy curriculum and how much effort goes into marketing said course.

Then, you have to work out the bugs, because users will have problems. How do you keep someone from stealing your work? What happens when you have a dispute?

Newlands suggests that you could start a blog. It’s pretty competitive these days. The most successful bloggers are ones that really work on their blog, every day. The bloggers have a brand, offer relevant content and are ethical in how they get traffic.

Think it’s easy? Better try again.

I could go on. Every idea he puts up there is a decent idea, but if he thinks it will increase your bottom line without a lot of hard work and effort, he’s delusional.

Today’s entrepreneurs need a plan. They need to work that plan, rethink it and keep working. They have to worry about liability, marketing and keeping up with technologies.

Being an entrepreneur is rewarding, but it’s hard work. It is incredibly inappropriate and grossly negligent to encourage someone to risk everything they have and are on the premise of not lifting a finger.

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Opinion Editorials

Why freelancers should know their worth

(OPINION EDITORIAL) Money is always an awkward talking point and can be difficult for freelancers to state their worth.

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Recently, I delved into what I’ve learned since becoming a freelancer. However, I neglected to mention one of the most difficult lessons to learn, which was something that presented itself to me rather quickly.

“What is your fee for services?” was not a question I had prepared myself for. When it came to hourly rates, I was accustomed to being told what I would make and accepting that as my worth.

This is a concept that needs multiple components to be taken into consideration. You need to evaluate the services you’re providing, the timeliness in which you can accomplish said services, and your level of expertise.

Dorie Clark of the Harvard Business Review believes that freelancers should be charging clients more than what they think they’re worth. The price you give to your clients is worth quite a bit, itself.

Underpricing can send a bad message to your potential clients. If they’re in the market for your services, odds are they are comparing prices from a few other places.

Having too low of a number can put up a red flag to clients that you may be under-experienced. What you’re pricing should correlate with quality and value; set a number that shows you do good work and value that work.

Clark suggests developing a network of trustworthy confidants that you can bounce ideas off of, including price points. Having an idea of what other people in your shoes are doing can help you feel more comfortable when it comes to increasing prices.

And, for increasing prices, it is not something that is going to just happen on its own. It’s highly unlikely for a client to say, “you know what, I think I’ll give you a raise!”

It’s important to never take advantage of any client, but it’s especially important to show loyalty to the ones that have always been loyal to you. Test the waters of price increasing by keeping your prices lower for clients that have always been there, but then try raising prices as you take on new clients.

At the end of the day, keep in mind that you are doing this work to support yourself and, theoretically, because you’re good at it. Make sure you’re putting an appropriate price tag on that value.

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