Graphic , Property Taxes by State and More.

Click on image to get larger size. (Link HERE should also get you picture that you can click to get larger size).

Originally created and posted on the Oregon Housing Blog.

My Projection: Avg New Home Sold in Portland Metro Results in Government Loss of $401 Per Month In Income Tax Revenue.

Last week the Oregonian Front Porch blog included a Home Builder Association provided PR that included some projected revenue impacts from new home construction in the Portland Metro area. (See item #5 HERE).

I thought it might be informative to use the Home Builder Association projected sales price and property taxes and do a projection of what revenue would be lost to the state and federal governments as a result of income tax deductions for property taxes and mortgage interest. (As Washington State does not have state income tax the state income tax impacts I calculated would NOT apply in Washington State portion of Portland Metro area).

My assumptions (more detail in the linked document below):

• LTV of 80%
• Loan rate of 6%, 30 year fixed
• Sales price and property taxes , same as provided by Home Builders Association
  
• Insurance assumption $100 per month
• Effective federal income tax of 15%, state 5% (both likely are low, resulting in understating revenue loss)
• Annual discount rate of 3%, annual property tax inflation rate of 1%.
• With the interest rate, mortgage and property tax amounts used, family qualifying income would be $95,788, using a "front qualifying ratio" of 29%.

My Projections are HERE: The Purchase of Avg. New Home By Family With a Minimum Income of $95,000+ Results in 30 Year Government Revenue loss/Subsidy Cost of $72,000+ or an Average of $401 Per Month.

• After discounting, total state and federal revenue loss is $72,195; Without discounting loss is much greater at $100,616.
• The discounted revenue loss works out to an average of $4,813 per year, $401 per month; recall that this housing subsidy is for a family with a projected minimal qualifying income of $95,788 per year.
  

Feedback/Sharing of Other Modeling Encouraged
I don't claim to be a tax expert or for that matter a whiz on financial calculations, and therefore encourage others to use the same or different assumptions that I used and to pass along any alternative projections of revenue lost from mortgage interest and property tax deductions.

Originally created and posted on the Oregon Housing Blog.

Homebuyer Tax Credit Extension Cost: $16.7 Billion; My Estimate of TOTAL Federal FY 2009 Home Ownership Subsidy Cost is $512 Billion.

WSJ story about extension cost is HERE.

Extension Senate Bill is S.1678, (I don't yet see an official CBO scoring for that bill).

Below is a PARTIAL listing of FY 09 federal home ownership subsidies, with links to the source document that contains the estimate.

Cost (Billions)	Use
$ 512.9	Total
$ 11.2	Cost of existing home ownership tax credit through mid September @1.4 million users X $8,000.
$ 16.7	Projected Cost of Home ownership Tax Credit Extension.
$ 290	FY 09 estimate for Fannie and Freddie.
$ 75	Estimate of costs for HAMP (Loan Refinance and Modification).
$ 120	Annual home ownership subsidies for mortgage interest and property tax deductions. (see footnote at bottom of page 17).

NOTES:

1. Subsidies for homeowners are NOT just a federal phenomena. My post HERE shows that homeowners get 91% of all housing tax subsidies from the State of Oregon.
2. HAMP costs shown above include multiyear totals; Fannie Freddie estimate may contain some multifamily related costs and costs are reduced in future fiscal years ($25 Billion in FY 2010 instead of $290 Billion in FY 2009).
3. Additional TARP costs associated with fixing financial institution problems caused by single family loan problems are NOT included.
   

Originally created and posted by the Oregon Housing Blog.