The Treasury Plays a Hand in Tax Lien Investments
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As you may have read elsewhere, the Treasury tax proposal may discourage much of the rampant speculation in real estate and tax lien investment that was common during the late 1970s and early '80s.
Many investments in the '70s were made with the idea that tax benefits would outweigh any disadvantages. As inflationary fever increased, mortgage interest rates rose higher and higher. Rather than deterring, in many cases, investors simply rationalized higher mortgage payments as a larger tax deduction. For investors in the 50 percent tax bracket, a 16 percent mortgage interest rate became "only 8 percent after taxes."