[ethbr1]

You, as a renter, are getting it -- your landlord is deducting their (commercial property) mortgage interest from their income (your rent). Probably in their Schedule E. [0]

Furthermore, for homes purchased after 2017, the personal mortgage interest deduction has been capped on $750,000 of mortgage debt (first and second home only, combined). [1]

Given the boosted standard deduction, thus isn't a major difference.

If you're going to pick a windmill to tilt at, there are much larger structural issues in US housing. As mentioned elsewhere: zoning that precludes new unit construction, SFH zoning for areas that would support denser development, etc.

[0] https://www.irs.gov/businesses/small-businesses-self-employe...

[1] https://www.irs.gov/publications/p936#en_US_2022_publink1000...

[moate]

>>You, as a renter, are getting it -- your landlord is deducting their (commercial property) mortgage interest from their income (your rent). Probably in their Schedule E. [0]

How does a landlord paying less tax require them to pass that benefit to the renter? Is the assumption that absent this money rent would be higher? If the amount returned to the landlord increased would the rent decrease proportionally or is this just the wishful thinking of trickle down?

[reaperman]

It's valid that benefits would pass to renters if the market was constrained by limited demand and priced at the marginal cost of ownership. If the market is constrained by limited supply, then benefits are absolutely not passed onto renters, and the market will be priced at renters maximum ability to pay.

I don't think we're either purely supply- or demand- constrained in Houston, TX. But I do think that a massive number of rental properties are using cartel-based pricing in the form of YieldStar software. This distorts the market just enough by preventing price drops in large amounts of properties in less desirable areas, which props up demand in more desirable areas.

This only works if large companies like Greystar and Knightvest and Post own both expensive high-end properties where they need strong ROI, and inexpensive crappy properties where they can take a lower ROI because the capital outlay per unit was a smaller % of their total assets. If both the shitty apartment and expensive apartment rent for $1,400/month, the shitty apartment might go vacant but it didn't cost much in the first place. Meanwhile the expensive apartment costs the same $1,400/mo so people say "that's a bit too much for me to really afford but I can't find anything cheaper and this is the nicest one at that price".

Without YieldStar's price distortion, the expensive apartment might still be $1,400 but the shitty apartment would likely be $800/mo. Enough people would move from the nice apartments to the shitty ones that the nice apartments would eventually have to lower their price a bit to maintain target occupancy rates.

[cool_dude85]

Oh, the free market passes this sweetheart deal on to me, the renter. Glad to see how well the system works.

[gigatexal]

Haha it sure as shit does not. Landlord's keep it. The reasoning that shareholder/landlord savings either via by tax or fiat are shared with tenants or customers is a hilariously wrong fallacy of trickle-down economic thinking that has been debunked.

[ethbr1]

It's literally impossible to "keep it."

The landlord charges what they believe they can charge.

That's set by market rates in your local area (or cartels like RealPage [0] et al.).

And that's set to homogenize returns with national rental alternatives.

And that's set by alternative options to invest of capital.

If you +5% to the costs of operating rental property, by removing a deduction, rents are going to go up.

And focusing on commercial mortgage interest deductions is ridiculous, as they're accounted for in the exact same way as every other business: expenses deducted from income.

[0] https://www.propublica.org/article/yieldstar-rent-increase-r...

[gigatexal]

I’m hypothesizing that removing favorable tax incentives for owners will cool real estate speculation and cause demand for homes to fall such that prices fall such that more renters become owners. There’s an eventual equilibrium sure but it’s probably at prices less than they are now.

I’ll concede to you on the costs flowing to renters in the sense that if ownership costs go up for all owners rents would follow.

I still think as a category the asset is far too tax advantaged at the expense of the poor or the non-home owning to the detriment of society as a whole.

[ethbr1]

I'm with you in that I fundamentally believe everyone who desires it should have access to home autonomy. In the sense they are the sole arbiter of actions involving their primary residence, including stable, predictable financing costs.

To me, the biggest problem is the lack of affordable capacity available for primary residence buyers at desired price points.

Which means increasing inventory.

Which means (1) upzoning for density (as most desired locations are land-constrained) & (2) preventing that new inventory from being constructed-as or repurposed-into rentals.

To (2), I'd love to see more efforts to increase costs on large landlords. E.g. a limited-number token system, effectively capping the % of rental properties in an area, with tokens regularly (re-)auctioned off to the highest bidder.

If a giant corporation wants to be a landlord, they shouldn't be able to corner the market.

[uoaei]

Savings are not passed onto the consumer. If they were, we'd all be working 10hr/wk and have free healthcare and insurance.