The new administration has recommended to Congress that the amount of mortgage interest taxpayers earning more than $200,000 a year and for couples filing jointly earning more than $250,000 of combined income can deduct for mortgage interest, should be reduced. 

The mortgage interest deduction on a primary residence of up to 1 million Dollars has been said to be a motivating incentive for Buyers at all levels. Is it?

Various claimed experts on the Mortgage Interest Deductibility tax incentive, dispute the valuable of it saying that it is not really all that useful for  home owners since less than 50% of mortgage holders actually utilize the deduction. These tax experts feel that it's only a benefit for only those who are very high income earners.

Our National and State REALTOR Associations are emphatically opposed to any attempt to modify the mortgage interest deduction because it is their contention that this could have a serious negative effect on the value of all property. In a recent letter from the Charles McMillan, President of NAR, He says "This proposed change in the mortgage interest deduction will result in further erosion of home prices and home values." " If this proposal is enacted , it will lead to a round of price depreciation, will cause greater distress on the balance sheets of banks as the collateral value of mortgage backed securities declines. A second credit crisis could emerge before the first one is resolved". Again, other experts dispute this contention. As REALTORS we have always believed that this deduction to be beneficial for most if not all buyers of and current residential property owners.

Despite hearing the experts claim otherwise,  I remain convinced that this deduction should remain sacrosanct for every homeowner. Even if early on a Buyer starts out with not enough income to benefit from the tax deduction of the interest, as they grow, prosper and move up in their occupation status, most would benefit from the Mortgage Interest Deduction.

Little wonder that now that it is up for discussion yet again, that the first target income group is the one said to be the most benefited from the deduction. Once Congress starts tinkering with this, I trust the slide will be moved lower and lower until this provision actually does become useless and is then finally removed from the tax code. If I understand this correctly, the tax benefit that most believe encourages home ownership ( whether perceived or real) would or should begin to diminish just when it is actually becomes a real benefit.

This is not the first time proposals were stated by an administration believing that the tax code needs an overhaul and the mortgage interest deduction ( now on the table for reconsideration) is one of the costliest provisions in the tax code. This most certainly makes one question the experts "usefullness question" of the deduction if it is the costliest provision in the current tax code. Some now dispute that it was never the intent of our federal government to subsidize the housing market. Subsidize the housing market is an interesting argument in light of the willingness of the government to subsidize farming, bail out auto makers, insurance companies and banks made rich from the housing industry.  A simple deduction that over time  became a fundamental part of the American Dream of home ownership is now the culprit that needs fixed. The experts take out of context that when this was last discussed it was part of a plan to illiminate all dedutions and replace the current code with a flat tax. That idea did not fly, nor should this isolated part of that proposal to target the homeownership incentive.

Put in simple terms, the incentive put in place to help encourage you to become a homeowner and benefit your community with the property taxes you pay in helping make the communities and state you live in to thrive could be taken away or at least greatly diminished when it is deemed that you are actually benefiting for it.