OT: Drop in value of homes

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snipped-for-privacy@aol.com wrote:

That is just incorrect. Mortgage interest is deductible, personal debt interest is not (and has never been).
Second mortgages and other forms of rolling improvements into mortgage vehicles have been in existence far longer than this for precisely that reason.
--


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dpb wrote:

Credit card interest was deductible until the 1986 tax reform bill.
Check it out at various sites, for example:
http://www.telegram.com/apps/pbcs.dll/article?AID=/20070325/NEWS/703250497/1052/RSS01
"On Oct. 22, 1986, President Ronald Reagan signed into law the Tax Reform Act of 1986. Reagan called the 829-page, 33-pound bill 'the most sweeping overhaul of the tax code in our nation's history.'
"The new code gradually phased out all deductions for interest paid on car loans, charge-account purchases, vacations and anything else that fell under what the law termed 'consumer loans.'
"The sole exception was interest payments on home loans. At the time, according to Mark Green, a spokesman for the Internal Revenue Service, Congress believed deductions for personal interest encouraged people to consume and stifle savings."
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It was until the Regan tax reform of 1986. I think even interest for auto loans.
See US Treasury Dept.
http://www.ustreas.gov/education/faq/taxes/deductions.shtml#q1

-- Oren
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Wrong. I have tax returns from the 1980s clearly showing credit card interest deductions and they must have been legal since there's a place for the deduction on the preprinted form. You must just be too young to remember.
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the bottom line,
for those who arent concerned relax and enjoy the ride but DONT complain if your hurting too by the time things bottom. perhaps unemployeed or underemployeed, perhaps you will need to sell your home for one reason or another and find not only is its value down, but buyers who are interested cant get a loan.
or so many end up out of work the cost to those still working skyrockets for socia services to help the unemployeed.
or perhaps what will bug you is that as government pumps money into our economy, the value of our dollar tanks and foreigners own and COINTROL the country.
true lack of personal responsiblity for both buyers and lenders caused the trouble, along with federal regulators ignoring the siituation.......
but this mess can and likely will hurt each and every one of us.....
stocks can go down just as easily as up..........
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In article
snipped-for-privacy@optonline.net wrote:

Closer than that. I can remember all sorts of economist hang wringing over getting into inflationary employment levels as late as the mid-90s during the Tech boom.

Take any 20 year period (including post bubble) post WWII and you still find that the stock market goes up an average of around 8% per year. (ANY 20 year period. 1980 to 2000, 85 to 05, 50 to wo
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well i certinally hope all these relax everything is fine dont worry things are great are REALLY as wonderful as you believe......
my point about the feds pumping money into the economy is that this means they believe things arent good.............
and they need to do something about it.......
my concern is that the entire US economy is based on consumption and the housing and other indicators may be showing a collapse of their base.
time will tell, but over 10% in mortage default hasnt been seen since the depression of 1929..........
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On Sun, 24 Feb 2008 16:19:04 -0500, <h> wrote:

Ever thought of purging those files? -- Oren
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When you have an ex who pops up every few years claiming that you owe him money for taxes and other payments from 1978-1989, you never throw out ANY financial record created during the marriage. No matter what ridiculous claim he makes, I have the paperwork to prove it's bogus. Anything from 1990 on, however, gets tossed after seven years.
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On Sun, 24 Feb 2008 14:36:10 -0800 (PST), snipped-for-privacy@searchmachine.com wrote:

You could have shot the guy in '78, and been out of jail, by now! -- Oren
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He SO isn't worth the cost of the bullet. Besides, it's not like I'm not able to prove I don't owe him a dime.
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Wrong. It was many years ago. Credit card companies even gave you a statement of how much you paid for the year. Car payment interest was deducible also. I think it was in the late 70's, maybe 1980 that the tax code was changed to eliminate those deductions.
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In article

Actually credit card debt become non-deductible during the 80s.
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snipped-for-privacy@aol.com wrote:

Make that 20+ -- it has been so long I had actually forgotten it, but it was the Tax Reform Act of 1986 that repealed it.
The above ascribed motivation is, however, still incorrect --
     FAQs: Taxes Deductions & Tax Liability
IMPORTANT MESSAGE: We have compiled the list of questions below based on inquiries that we receive. This information is generic in nature regarding tax policy questions and is NOT intended to serve as tax advice. We also cannot provide up-to-date information on any Administration or Congressional proposals that may affect the information shown herein. Any questions regarding specific tax situations or for help in filling out your tax return should be directed to your attorney, accountant or other tax professional, or to the Internal Revenue Service. The IRS will not comment, though, on the legislative merits of current tax law, or on pending Congressional action that may change the tax code. Finally, we make every effort to make certain that the information contained here is accurate, but due to the fluid nature of the legislative process, changes in tax laws may occur that are not reflected here at the time of publication. To the best of our knowledge, this information is accurate.
Question Why can't I deduct "personal" interest expenses when I purchase a car, or for the interest on my credit cards?
Answer The deduction for personal interest, including interest on charge card purchase of consumer items, was phased out by the Tax Reform Act of 1986. Congress believed that the deduction for personal interest encouraged people to consume and that such consumption was at the cost of savings. At the time, the American savings rate was declining and, unfortunately, the private savings rates continues to remain low. To eliminate the significant disincentive to savings, Congress repealed the itemized deduction for personal interest other than mortgage interest.
http://www.ustreas.gov/education/faq/taxes/deductions.shtml#q1
So, "greed" played little in the decision; it was an attempt to influence a more responsible consumer attitude by monetary/taxation policy.
--
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Looking back now, it was a good policy. Credit card interest escalated to 20% or more under Jimmy Carter.
I remember long gas lines in the 70's, 5 lbs. sugar was nearing $6.00.
I hope Congress will do the right thing and not tax the Internet! -- Oren
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Oren wrote:

Yes. Bringing it up as if a 20+ yr old policy targeted to the low savings rates of consumers as if it had any bearing whatsoever on the current sub-prime mortgage situation was simply ludicrous. Unfortunately, it had been long enough ago I had actually forgotten it was ever policy to allow personal interest...
And, of course, high interest rates were not on c-c interest only--CDs were paying 12% or more. --
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well the unintended consquence was rolling way too much debt into homes, thus adding voltality to the market.
most people i know have done this and sadly will never pay off their homes, unless they live to over a 100
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dpb wrote:

Please don't remind me ....... those were the days when babyfood and milk were repriced three times whilst they sat on the shelf in the grocery store. My folks had CD's .....13%?
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Before 1986 it was
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snipped-for-privacy@aol.com wrote:

Hi, I was taught to buy only what you need when you can afford. Living by the rule I ended up living comfortably without any debt. People buy what they want, not need regardless of their ability to pay for it. Your government is leading the example running into deep deep deficit.
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