In order to pay for his new budget, President Barack Obama is proposing to slice up the longtime sacred mortgage interest deduction. The proposal would reduce the deductions for those earning more than $250,000. This was unveiled this week as part of a plan that would take effect in 2011.
Currently, households paying income taxes at the 33% and 35% rates can claim deductions at those rates. Under the new proposal, they could deduct only 28% of the value of those payments.
This proposition is certain to set off a heated battle within the housing-related industries. The National Association of Home Builders released the following statement attacking the plan:
"With the housing market still reeling from its worst downturn since the Great Depression, this is not the time to talk about raising taxes on home buyers and home owners. This proposal will increase the cost of housing for many middle-class families, particularly in high-cost areas such as California and the Northeast, which will only further undercut the housing market, exert more downward pressure on home values and work against the President's efforts to stabilize housing and turn this economy around."
When one of the underlying problems in the economy is the housing market, with billions of dollars currently being thrown at that same problem, why would it make sense to make life harder on homeowners who are keeping up with their payments and playing by the rules?
The mortgage interest deductions along with deductions on real estate taxes and insurance have, for many years, given first time home buyers incentives to purchase and current homeowners a break on the cost of home ownership.
Due to the ever-slowing sales pace, inventories of both new and existing home inventories are increasing with foreclosures only adding to the glut.
Now is the time to attract people into the market to purchase these homes - not reduce the incentives that have already been in place.
Copyright 2009 - Claudette Millette, President, TheBuyersCounsel - 800-392-1446, E-mail Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Sherborn, Southborough, Sudbury, Wayland, Westborough
Copyright 2009 - Claudette Millette, President, TheBuyersCounsel - 800-392-1446, E-mail
Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Sherborn, Southborough, Sudbury, Wayland, Westborough