Owning a Home in U.S. Has Fewer Tax Benefits Than You Think

[Francis A.]

http://www.bloomberg.com/news/articles/2016-04-14/...

A case for (among others), multi family and/or cash flowing properties/rentals in the face of dwindling tax benefits? The beat continues...

 

[Jeff B.]

Yes, there are various issues in the economy, the tax system and property taxes.  I find it strange that some read 

• "the sum of the parts is greater than the whole" 

to mean as an investor (or even a home owner) we have to win in every aspect of ownership or 'the sky is falling' starts to occur.

One of the BIGGEST mistakes foisted upon the baby boomers was the notion that your home is an investment.  In Calif, that resulted in Heloc's, Refi's and the end game was going upside down.  Texas on the other hand, restricts those activities and a) the home owner can't get upside down and b) the only way to access any equity was to sell out.

Treating your personal home not as an investment but as a HOME, you don't play with equity, get upside down, or even care that the value today is lower than that for which you purchased it.

Getting myopic on taxes and or appreciated values does not mean we light a torch or flagellate. A home is for the family, not the CPA, IRS, or a JV, so don't treat it as if it were.

A non-owner occupied rental is never purchased because "Oh goody, look at these tax advantages".  Cash Flow and Appreciate values when sold far out weight whatever the tax consequences might be (including Cap Gains).

My current exit plan has components:

• life time cash flow + appreciated sales value - capital gains

let me assure you while the gains are significant, the equation is massively net positive.  I won in two aspects and lost slightly on the third.  I'll happily pay to have played the game.