6 Distortions of the Housing Market

Part 8 of... "6 Tax Breaks Landlords Get that Hurt the Economy and You"

All 6 landlord tax breaks distort the market for single-family houses to the advantage of landlord owners and to the disadvantage of live-in owners but also to the disadvantage of the U.S. economy as a whole.

Here are 3 More

20% Pass-Through Tax Deduction. This is new. It just started in 2018. Most landlords, including most single-family landlords, “can deduct up to 20% of their net business income from their income taxes, reducing their effective income tax rate by 20%”.

Property Tax Deduction. Like the mortgage interest deduction, most live-in owners don’t get a tax deduction for paying their property taxes. All landlord owners, however, get a tax deduction for paying their property taxes.

Reduce Taxes on Other Income. Landlords can make money in the real world but lose money in the paper tax world, and then, in some cases, they can use those paper tax losses to reduce the amount of real money they have to pay in taxes on their real, ordinary income, or their spouses’ income.

All three tax breaks let landlord owners pay less in taxes and make more money. That, in turn, lets landlord owners bid up house prices for everyone and slow economic growth for the country.

What landlord tax breaks have I missed?

Landlords get other tax breaks I haven’t mentioned. Tell me in a comment.

I’m not an accountant. I’m just an economist trying to explain simply, in everyday English, what I’ve found online.

Next

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All

Part 1 – 6 Tax Breaks Landlords Get that Hurt the Economy and You

Part 2 – Depreciation Tax Deduction – (Tax Deferral)

Part 3 – 1031 Exchange – (Tax Deferral)

Part 4 – Mortgage Interest Tax Deduction – (Tax Reduction)

Part 5 – Tax-Free Landlord Profit – (Tax Deferral)

Part 6 – Taxes on Capital Gains are a Lot Lower Than Taxes on Ordinary Income – (Tax Reduction)

Part 7 – Stepped-Up Tax Basis – (Tax Reduction)

Part 8 – 6 Distortions of the Housing Market

Part 9 – 2 Sets of Rules for Single-Family Houses

Part 10 – Fixed Supply of Single-Family Houses

Part 11 - Houses for Homes, Not Tax Shelters

Part 12 - Solutions

Part 13 - Permanently Increase Economic Growth

Part 14 - Life is Crazy Enough

Part 15 - The Hardest Part

Part 16 - Distorted Back to Reality

Part 17 - Stop Distorting the Housing Market

Part 18 - Conclusion