Mortgage Interest Deduction Teetering on the Edge of the Fiscal Cliff
Michael Kara in Florida has written well on the unintended consequences of chaning the mortgage interest deduction while our economy is still struggling to recover (with only about 64% of eligible workers currently working or seeking work).
One of the many compromises being levied in the discussions on the Fiscal Cliff is whether or not the mortgage interest deduction on income tax should be allowed to continue in its current form.
Currently, the mortgage interest deduction allows homeowners to reduce their income tax by the interest paid on mortgage balances up to $1 million as well as on home-equity loans equaling $100,000.
Proponents for seeing the mortgage interest deduction removed state that it really only benefits wealthy homeowners, or those who need it the least. However, the National Association of Realtors (NAR) believe that the repercussions of removing the deduction would hurt homeowners across the boards.
In 2010, a study was conducted by the Tax Policy Center of the Brookings Institution and the Urban Institute to showcase the effects of President Obama’s tax reform proposals for fiscal 2011. These proposals included a limit on mortgage interest and property tax deductions. It was found that taxpayers in the 33 percent bracket, who had their mortgage interest deductions limited to 28 percent, had their home values drop by 6.9 to 15 percent.
NAR Chief Economist Dr. Lawrence Yun has stated that removing the mortgage interest deduction could be a very costly decision that “could greatly destabilize the economy.” Ben Stein, on CBS Sunday morning, also argued against removing the deduction, as “we are just barely limping off the bottom of a residential housing catastrophe, and home buying and building are finally, after a genuine nightmare, reviving.”
Ultimately, it’s up to homeowners to raise the call and fight against removing the deduction, and NAR is helping to lead the charge. They have set up a Call to Action form on their site that allows users to easily send a message to their Senators and Representatives stating their opposal to the removal. While set up for Realtors®, it can easily be adapted for any person wishing to participate. We strongly encourage for you to make your voice heard if you want to see the mortgage interest deduction continue.- Michael Kara
RE/MAX Exclusive Collection
407-447-2829
marketing@exclusivecollection.com
www.exclusivecollection.com
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