How did the home interest deduction come about?
The First Income Tax - In 1894 Congress passed the first income tax, which was challenged and later struck down by the Supreme Court. So, government got into gear and in 1913 the Sixteenth Amendment was ratified granting Congress the power "to lay and collect taxes on incomes, from whatever source derived."
The Second Income Tax - Congress quickly imposed an income tax starting at 1% and rising to 7% on incomes over $500,000. This resulted with less than 1% of the US population paying any income taxes. This was the beginning of the modern graduated income tax.
Enter The Tax Deduction - The tax was offset with a deduction of any interest paid. Rental income was offset by the interest paid to finance the rental property and interest became a tax deduction.
Prior to WWI, home owners typically owned their homes outright. With the exception of financed or leased farm land, homes were purchased with cash. So at first, the mortgage interest deduction did not benefit homeownership.
Soon, local Thrift & Loans (Savings & Loans) were created to provide access to home financing.
Subsequently, programs through the FHA, VA, and later Fannie May and Freddie Mac facilitated broader homeownership. Finally, the creation of the conventional loan and the mortgage back security market brought financing to the masses. Along with homeownership came the mortgage interest deduction.
Of course home ownership today still makes sense in terms of deductions so let’s take a look at some good options here on the peninsula.'
25850 PASEO DE LOS ROBLES , Salinas Monterey Highway MLS #: 81050150 $2,175,000 Beds: 4 Baths: 3.5
This gated, single story estate in Pattee Ranch has 1st class quality of craftsmanship & attention to detail. Follow the flowing floor plan to the enormous master suite w/ office, fireplace, his & hers walk-in closets, private patio & views of Castle Rock. The gourmet kitchen was completed in summer of 2010 w/granite, stainless steel & wine fridge. Backyard boasts a stone fireplace, bocci court, pergola, putting green & incredible views! SqFt: 4,708 Lot Size: 2.76 Acres Check out photos on site www.pattyrosscarmel.com
109 17TH STREET, Pacific Grove MLS #: 81050655: $899,000 Beds: 2 Baths: 2 (2/0)
Newer home, move-in ready & just steps to Lover's Point and Monterey Bay Coastal Trail in the heart of PG. Eric Miller designed, contemporary Mediterranean retreat w/ground level master suite w/private patio. Elevator takes you to the great room w/fireplace, kitchen w/ample granite countertops, Maple hardwood floors. Cathedral ceiling & windows fill rooms with light. Peeks of Bay, 2 car garage. SqFt: 1,593 Lot Size: 2,100 Sqft
129 WHITE OAKS LANE, Carmel Valley MLS #: 81050838 $660,000 Beds: 2 Baths: 3 (2/1)
Completely remodeled condo in 1999. New roof 2 years old. This beautiful light & bright unit has the most desirable floor plan and view location. Spacious south facing deck surrounded by private landscaping. SqFt: 2,090 Lot Size: 3,570 Sqft
779 ALICE STREET, Monterey MLS #: 81051072 $549,000 Beds: 3 Baths: 2 (2/0)
Shining top-of-the-hill New Monterey home; spacious reverse floor plan with vaulted ceilings and lots of light upstairs with an open/inviting family room-kitchen with balcony for the barbeque; master upstairs, two beds/bath and laundry on first floor; perfect spot to get to DLI on a quiet street; size level lot with room for gardening/plants off of back deck; ready for new owners now! SqFt: 1,438 Lot Size: 2,500 Sqft
© Patty Ross - KRXA Radio Show #181 October 22, 2010
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