Tuesday, April 18, 2006
Time for Updating
I just finished the Massachusetts Form 1 and schedules C, E, Y, and DI, which left me with a blogworthy thing that irritates me each year. I mean, besides the whole legalized theft thing in general.
It’s the Massachusetts rental deduction.
We paid $13,125 in rent last year, which is more than my total income for most years prior to 1993. The deduction is half your rent, up to a maximum of $3000.
This particular tax deduction was part of the famous Proposition 2 1/2, which was inspired by California’s Prop 13 (which from what I understand was poorly written in a way that has led to increasing weirdness, but I digress). The law limited property taxes, benefitting homeowners and, of course, owners of rental property.
On the theory that renters wouldn’t get a break the way homeowners would, the benefit being absorbed entirely by landlords, a deduction of 50% of rent paid was included. Well, that and it helped the referendum pass because it gave many more people a stake in the outcome.
Circa the time of Prtop 2 1/2 my first apartment was $225 a month, $2700 for the year, which would have been a deduction of $1350. Great! But they slapped the maximum on it, and the maximum has had no relation to the reality of rents for most of that time.
And so it is that the lovely 50% rent deduction is less than a quarter rent deduction, with our rent low by many people’s standards. Nobody pays $500 unless they’re splitting a place or have some particularly fortuitous situation renting from a relative.
I think it’s time to go by the original law, or raise the limit to a more realistic amount. $6000 would be acceptable. If you’re gonna give breaks, you should do it right, and keep up with the times. Sheesh.