The Mortgage Interest Deduction has been a part of American Income Tax system since 1913 – so over 100 years of benefiting the American Dream of Home Ownership. It is one of the tax deductions that frequently are placed on the chopping block. What would happen to the average homeowner in the local marketplace for this deduction to be eliminated from the tax code? Many believe that it would have an immediate and significant impact on home values. It could definitely impact the leverability of home ownership.
The mortgage interest tax deduction matters! In 2020, for mortgages taken out after October 13, 1987, and before December 16, 2017, mortgage interest is fully deductible up to the first $1,000,000 of mortgage debt. For mortgages taken out after December 15, 2017, the threshold has been lowered to the first $750,000 of mortgage debit. Consult a tax or financial advisor as to the requirements and to verify qualification.
In market areas where the cost of housing is expensive relative to the majority of the United States, such as in the Northern Virginia, Washington DC and suburban Maryland marketplace, the size of the mortgage interest deduction utilized by taxpayers is the most. By correlation this means that the areas of the United States that have high housing expenses will be disproportionately impacted by any changes to the tax code related to the mortgage interest tax deduction.
The National Association of Realtors® states its support of the deduction as follows: "Housing is the engine that drives the economy, and to even mention reducing the tax benefits of home ownership could endanger property values. Home prices, particularly in high cost areas, could decline 15 percent if recommendations to convert the mortgage interest deduction to a tax credit are implemented."
Without the mortgage interest tax deduction it will make home ownership more expensive. Any further decrease of the allowable amount could have a substantial impact on the United States economy. There is a saying: “so goes housing, so goes the economy.” Owner occupied homes are key to the strength of the housing market in the United States.
Karen Briscoe and Lizzy Conroy and their team HBC Group at Keller Williams are active and experienced Realtors® in the Northern Virginia, suburban Maryland and Washington, DC marketplace. They would be delighted to assist whether for home buying or selling. Please contact via the means most convenient for you: www.HBCRealtyGroup.com, 703-734-0192, Homes@HBCRealtyGroup.com.