WOW! If the mortgage tax deduction goes away this will hurt ALL homeowners. Unlike my home where we have to live within our means, our governments continues to spend more money than it takes in and rather than tighten the belt they want to raise taxes and do away with crucial tax deductions that have helped out us middle class people for as long as I have been a homeowner. For all the latest news in real estate please read by blog at www.fishhawkhomesforsale.com
Mortgage interest tax deduction
Diminishing or ending the mortgage-tax break, especially for high-income taxpayers, is likely to be included in that discussion, the Times said of the deduction long seen as untouchable.
The National Association of Realtors has strongly opposed eliminating the mortgage-interest deduction for years, saying it “could endanger property values.”
Association President Gary Thomas told the Times in an email Monday, “It has always been the NAR’s position that the mortgage interest deduction is vital to the stability of the American housing market and economy, and we will remain vigilant in opposing any future plan that modifies or excludes the deductibility of mortgage interest.”
The conservative Tax Foundation says economists are “basically united in their opposition” to the deduction. It says giving a tax subsidy to housing skews investment toward houses and away from factories, equipment and other assets it says are more productive.
Households saved $83 billion they would have paid in taxes in 2010 with the mortgage-interest deduction, the libertarian Reason Foundation says. Higher earners realized most of those savings.
The tax code could be changed in a variety of ways to increase tax revenue from higher earners, the Times said. The interest deduction relating to second homes could be ended, the newspaper gave as an example. Or the cap on mortgage debt eligible for the interest-rate deduction could be reduced.
At present, interest is deductible on only the first $1 million of debt used for acquiring, constructing or substantially improving a home.
Before the Tax Reform Act of 1986, the interest on all personal loans – including credit card debt – was deductible. The act eliminated that broad deduction but created the narrower home-mortgage interest deduction under the theory it would encourage homeownership.
Other countries with high homeownership have phased out the mortgage-interest deduction, the Times said.
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