Sometimes life throws curves your way. It can put you into situations you never intended—which may be hard to explain. That’s how it is with me and the tax collector.
As we recently experienced, there’s nothing like Tax Day to bring home the reality of just how many dollars are diverted into government coffers. Instead of quietly resting in our St. Cloud bank accounts where they belong, great bunches of our dollars are dispatched to the tax collector, thinning the ranks of their fellows in the bank. They’ll be left to face the future alone. I’d be tempted to paint a picture of our remaining cash left shivering in the dark—but that might be overly dramatic. Let’s just say there would be a lot more of it were it not for April 15.
As usual, this past April 15 again forced us to put it all on paper—to gather all the telltale evidence that yields the whopping bottom line number: amount owed. Even if over-withholding meant that a refund check would be coming back our way, the tally of how much cash had flowed in the opposite direction was often jarring.
A lone positive goes to St. Cloud’s mortgage-paying homeowners. The degree of brow-wrinkling is always less for them than for St. Cloud’s renters with the similar financial profiles. Tax Day is an annual reminder that the mortgage interest tax deduction lowers the tax burden right now…and substantially.
The tax deduction provision is actually only one of the two most financially rewarding aspects to St. Cloud homeownership. A home’s equity—the barely visible sum that builds each month as the mortgage shrinks—increases quietly in the background. It feels a little bit abstract, even though the value represented is ultimately every bit as tangible. But especially on Tax Day, the interest tax deduction is right there in black and white—with three or more zeros behind it! Most homeowners can be forgiven for shuddering if a thought like, “what if we couldn’t subtract that?” momentarily crosses their minds.
It’s also why the tax collector (albeit unwittingly) is a palpable contributor to the real estate industry. My real estate industry. It’s only realistic to acknowledge that the irritating persistence of the Internal Revenue Service is a strong motivating force for home buyers. By default, anything that makes homeownership popular helps me help sellers reach their goal. Come to think of it, that could well be another reason that explains why the “spring selling season” is always the busiest time of year. Tax Day is right there near the kickoff point, timed perfectly to stir buyers to action.
So, it’s nothing I’d ever want to publicize, but I guess that, because of the huge financial advantage that the mortgage interest tax deduction carries, the tax collector would have to be considered an ally when you and I band together to sell your St. Cloud home (but maybe it would be best not to mention that to anyone)!