Untaxed imputed rental income is a $96 billion yearly hidden homeowner subsidy
Evidence
- IRC §164. The 2017 Tax Cuts and Jobs Act limited the deduction of state and local income taxes and real property taxes to a maximum combined amount of
10,000. (The limit is the same for singles and married couples.) There is one other rather obscure tax subsidy for homeownership. Homeowners do not get taxed on the fair rental value of their homes, similar to when stay-at-home spouses provide tax-free services to their families. The technical tax term is “imputed income.” The theory is if you were not living in your home, you would rent it out and have to include the rent received from your tenant in your income. By living in your own home, you are escaping taxation on that amount. Imputed income is not taxed in the United States, although it is taxed in other countries (Belgium, Finland, Denmark, Germany, and Sweden, to name a few). The most recent estimate from the Obama administration was a projected revenue loss of96 billion for 2020. — Dorothy A. Brown, The Whiteness of Wealth, 665
Categorization
- DEFINE: Defines the technical term ‘imputed income’ and explains the economic theory behind it clearly.
- SEED: The contrast between taxing imputed rental income in five European nations but not the US, worth $96 billion yearly, is a strong overlooked-angle article hook.