Is the Mortgage Interest Deduction in Jeopardy? (Part – 2)
The Real Story…
News and commentary about the real estate market and related topics.
Dave Parrish, ABR®, CSP, GRI, ePRO®,REALTOR ®, RE/MAX MarketPlace
The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.
Is the Mortgage Interest Deduction in Jeopardy? (Part – 2)
As we discussed last week… the National Commission of Fiscal Responsibility and Reform recently (December 1, 2010) released its recommendations for reform to bring accountability and responsibility to the problem of the national deficit. A portion of those recommendations included suggested changes to the Mortgage Interest Deduction (MID). Now whenever there is a change to the status quo, there will always be a great deal of concern and anxiety. A change to a deduction that has been so widely accepted and exercised will of course be questioned in many ways… and so it should.
As discussed last week, there are some legitimate questions being raised about the effectiveness of the MID in increasing home-ownership… (its primary goal)… and if the reduction in treasury income is being forfeited in the most beneficial way for the economy.
In 2012, the mortgage interest deduction will reduce federal revenues by $131 billion. In contrast, the entire budget for the Department of Housing and Urban Development is just $48 billion.
So is there a better way? Alternatives range from eliminating subsidized mortgages entirely to capping the deduction or converting it to a credit. Each option creates winners and losers. First let’s review what is being proposed. At present, there are several components being suggested on place of the MID.
- 12% Non-Refundable* Tax Credit.
- No Credit for mortgages above $500,00
- No credit for interest on second residence or for HELOC (Equity Loans)
Page 1 of 3 | Next page
