Taxpayers to lose mortgage interest deduction? Yes, if commission has its way.

The New York Times reports on a new commission report urging the elimination of the mortgage interest deduction from income taxes.

“By proposing to curtail the tax deduction for mortgage interest, the president’s deficit commission is sounding an alarm.”

“The home mortgage deduction is one of the most widely used and expensive tax subsidies. More than 35 million Americans claim it, and the federal government estimates it will cost the Treasury $131 billion in forgone revenue in 2012. Its size, popularity and link to the emotionally charged American notion of homeownership has made it so politically sacrosanct that there are serious doubts whether Congress will even entertain the idea.”

So why raise it as an issue? “[T]o jar the public into recognizing the magnitude of the nation’s budget deficit and some of the drastic steps that might be needed to close it.”

But the mortgage interest deduction is a great benefit to middle-income homeowners. Won’t this dump more of the deficit reduction responsibility on this group? The answer is yes.

“The proposal, part of a draft by co-chairmen Alan K. Simpson and Erskine B. Bowles, suggested that the tax code could be streamlined, and income tax rates drastically lowered, by eliminating the $1.1 trillion in annual tax expenditure entitlements — subsidies and breaks given to targeted businesses and individuals. The commission chairmen also offered the option of capping the deduction at $500,000 on mortgages, rather than the current limit of $1 million.”

Once again, the specter of class-warfare is brought to the fore as

“The prospect brought an angry outcry. House Speaker Nancy Pelosi blasted the commission’s suggestions, saying it would force middle-class homeowners to subsidize tax breaks for the wealthy.”

“The mortgage interest deduction is one of the pillars of our national housing policy,” said Michael D. Berman, chairman of the Mortgage Bankers Association. “Limiting its use will have negative repercussions for consumers and home values up and down the housing chain.”

“But tax policy experts say that for all its popularity, the value of the deduction in public policy is debatable. It was intended to encourage homeownership, but housing economists point out that countries like Canada and Australia, which do not allow mortgage interest deductions, have homeownership rates similar to those of the United States.”

That may be true, but we are not in Canada or Australia.

Read the full article and see how the proposal may impact us all.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com