Discussion Individuals who own homes may take a tax deduction for interest paid.

Question

Discussion

Individuals who own homes may take a tax deduction for interest paid. Many individuals believe that this tax law discriminates against individuals who rent. Do you think this deduction is discriminatory? Explain and share your thoughts.

Additionally, gifts and inheritances have been excluded from gross income since 1913. Discuss the tax consequences of gifts made of property and any income produced by the property. What, if any, are the exclusions and taxable income according to Section 102.

Explanation / Answer

This deduction is not discriminatory for the following reasons:

However, there is another way where in persons taking preoperty on rent also gets benefited.The property tax if any that is being paid by the person taking property on rent isallowed as tax credit to person paying rent in some states, alternatively if the owner declares that the property taxes are being paid from an amount earmarked from the rent paid by the persons, can also be taken as tax credit.

Gifts and inheritaces excluded from gross income:

Any property gifted is not included in the computation of gross income. The property that is being gifted must have been earned out of income for which tax has already been made.

However, the income earned out of that property is included in the gross total income, as it is a regular benefit that the person who received the gift enjoys from the gift, if is taxed in the hands of the person to whom the gift is made.

There are certain exceptions for prizes except qualified scholorships, employee achievement awards etc.,

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