I assume the low capital gains tax is because the money is 'at risk' in the market, but for professions with long expensive educations - the risk is in the time and money investment up front. Additionally doctors/lawyers are more likely to actually spend their money locally to buy and fund local business since they're not moving around millions of dollars or just leaving their wealth in the market - taxing them harder just means they won't pay local contractors to have an addition on their house and they'll pay taxes instead.
Yes. The situation is analogous to borrowing money to invest in the stock market: Your profit is the profit you make from the stocks minus the interest you pay on the loan, and that difference is what you pay tax on.
In Canada, a mortgage on a principle residence is not tax deductible, since Canadian tax law doesn't consider where you live to be an "investment"; this is balanced by a principle residence being exempt from capital gains tax.
If you have a business that borrows to buy and then rent houses, the same principle pertains; the interest on the mortgage is an expense.
Only in proportion to the fraction of the house which constitutes your home office.
If you have a business that borrows to buy and then rent houses, the same principle pertains; the interest on the mortgage is an expense.
Right -- mortgage interest is a business expense when it's paid for a business reason. A principle residence is not considered to be an investment; it's considered to be a home.
Seems to be another one of those perks that got removed just as I reached the point in life where I'd benefit from it.
The student loan interest deduction gets phased out pretty early. It's gone once your AGI is over $75k.
ITEMIZED deductions get reduced by 3% of every dollar you make over a specified threshold. That's 300k in 2013 with this bill. It's called the Pease phaseout and its back after being partially or completely repealed in previous years.
But I think my main point was that a lot of deductions disappear once your AGI reaches a point where people feel that you don't need the benefit of that deduction.
With Pease Itemized Deduction phaseouts, the effective tax rate for high wage earners goes up independent of their marginal tax rate because more of their income is taxed at those rates.