March 6, 2012

"In Loss For Gay Couples, Celebrity Shrink Gets Mortgage Deduction Shrunk."

This Forbes article — via TaxProf — makes it look like gay couples are getting ripped off by the federal government. They can't be married for federal tax purposes, but they are treated as a single unit in being limited to deducting interest on only $1.1 million in mortgage debt. But if you read all the way to the end of the article, you'll see that the Tax Court was treating them the same as all other taxpayers who live together and jointly own property. That would include unmarried heterosexual couples, 2 friends living together without a sexual relationship, 2 sisters, a parent and child, etc. etc.

18 comments:

Dan in Philly said...

Within 10 years the federal government will no longer recognize marriage in any signifigant legal way. That is to say in the eyes of the government, there will be no difference between being married and not for any way you want to join with another man, woman, or otherwise.

bagoh20 said...

Hmmm, treating them the same without calling them married? What a novel idea.

EDH said...

In her decision, U.S. Tax Court Judge Mary Ann Cohen agreed with the IRS that Congress meant the $1.1 million debt limit to apply to an individual residence (or residence and vacation home) and not to individual taxpayers.

So, whether married or unmarried, if the couple owns two properties with more than $1.1 million in mortgage principal it's better to hold them under separate (rather than joint) title in order to potentially double the amount of mortgage interest that you are permitted to deduct?

Dan in Philly said...

Indeed. There was once a time when the state took marriage seriously. Now it's only an issue to be demagogued by the left and the right until it's torn to pieces and there is nothing left.

The one side will not tolerate marriage to include what has never been included before. The other will not tolerate marriage not to include what seems to them it should. Neither side will allow the other to win outright political victory. Individual politicans can lose more voters than they gain by taking a stand one way or another. The only resolution will be abdication of the state from the business of recognizing the institution at all.

Of course there will be many "unforeseen" consequenses of this, which are actually quite easily forseeable. Future generations may find us wise or silly for this fight and the way we will resolve it.

Renee said...

The answer may be easier if we review of laws, and ask ourselves if marriage is relevant to a particular policy, rather then redefining marriage.

jimbino said...

This is but one example of how extending the marriage franchise to gays will serve to increase the severity of the discrimination against singles and groups of singles.

In the interests of fairness, marriage should be de-recognized by the gumming for both gays and straights. Let them start paying their fair share of taxes!

cubanbob said...

Renee perhaps the problem is government and it's policies rather than the institution marrige. one novel idea would be to use the the tax code as solely as a vehicle to raise revenue for government and notvasca vehicle for social engineering. Gee imagine if legisltors actually had to vote on all spending bills every year instead back door hfinancing through the the code. Coupled that with getting government out of the social engineering business and we might even become a free nation again.

JohnGalt said...

I thought it was good for teh 1% to pay their fair share?

Synova said...

"By contrast, the law explicitly limits a married couple whose marriage is recognized by the IRS (which same sex marriages aren’t) to one $1.1 million mortgage interest deduction, whether they file jointly or separately."

So... this doesn't favor married people at all then?

It's just, OMG it's sticking it to gay couples?

Or maybe it was so much of a non-story someone decided that it needed a hook to make it interesting?

MayBee said...

I've been wondering how gay people who are legally married (but not for Federal tax purposes!) handle their taxes when one makes the money and the other stays home with the children, or has a low paying part time job. Can the SAH get EITC?

I suppose this question applies to non-gay non-married people as well, but they've made a decision not to get married.

edutcher said...

10 years ago, same sex couples had better treatment than heterosexual POSSLQs, including insurance.

Now watch the drive to give them preferential treatment over married couples.

And then married couples with kids.

As I say, it's all a gimmick.

Jane said...

For a bit of comparison, I'm doing a project for work where I'm summarizing social security benefits in other countries. In country after country, your benefits are based on whether you're living alone or partnered in any fashion (sometimes, but not always, including roommates).

Most marriage "benefits" are based on the assumption that they're a dependent spouse involved -- and some countries handle this more explicitly. Instead of getting a Social Security benefit based on your husband's earnings record, you earn Social Security credits for years that you had no income and small children in your care, based on national average wages.

But here's my favorite tax trivia: in the Netherlands, if I remember right, far from having a mortgage interest deduction, they actually treat owning a house exactly the same as any other investment, with taxes paid on the imputed income from owning it and being your own "renter."

tim maguire said...

Still, I can see why it's all a bit galling. When the government finds it convenient to treat them as individuals, they are treated as individuals. When the government finds it convenient to treat them as a couple, they are treated as a couple. And, because they're gay, there's nothing they can do about it.

They're told it's all for family values, but they're really just pawns of other people's sense of self-interest.

chickenlittle said...

Pink herring

mariner said...

But they're GAY, dammit!

Can't you see that makes this decision bigoted and homophobic?!

Joe said...

I found the article absurd. Were there really accountants who believed two people could take the same deduction? Really?

viruskiller said...

not absurd. that's okey !

Methadras said...

So they are being treated equally like every other autonomous citizen of the US. Shocking!!!