The new tax law caps
state and local income-tax and property-tax deductions at a total of $10,000;
previously there was no limit. That means the new tax law may encourage home rentals.
“Let’s say you pay $1,000 a month in property tax ($12,000 a year) on a home.
Under the new rule, if you live in the home all year, you’re only entitled to a
$10,000 deduction. But say you rent it out for three months. You can deduct 25%
of your property tax, or $3,000, on Schedule E for rental deductions and
income. You can then deduct the other $9,000 you pay in property taxes on
Schedule A for itemized deductions, allowing you to deduct the full amount of
your property tax, Mr. Fishman says.” That means you don’t need to pay any
property tax for the three-month rental. This is indeed good news for
short-term renters.
But why do so
many people choose to buy when there are so many benefits? Perhaps an immovable
home of one's own is a security. We work hard to make money and having a house
of our own can be a comfort. Although renting is a practical solution for me to
live in a house, my final opinion is that the final form of living in a house
is a house with property rights. Otherwise, I will try to buy a house even if I
have all the rights to rent a house.
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