Thursday, December 2, 2010

Mortgage interest deduction in trouble

We’ve written previously about the threat to the mortgage interest tax deduction. Will it happen? There’s a good chance. The unanswered question is – what happens to the real estate marketplace?


Realty Times’ Carla Hill writes,
“For months now, experts have been debating the fate of the home mortgage interest deduction (MID). So why exactly are politicians targeting the MID? With a federal deficit of around $13 trillion, officials are hard-pressed to find ways to curb the growing the debt.
“ Some say there are better options available than keeping the MID, following suit of many European nations who have in recent years nixed the deductions themselves, but the National Association of REALTORS® (NAR) disagrees. They feel that this deduction is a strong incentive for homeownership. For nearly 100 years homeowners have been allowed to deduct the interest paid on mortgages for their primary residences, second homes and most home equity lines of credit.”
Frankly, the deduction of mortgage interest helped expand primary- and second-home ownership. Although not the primary incentive to home ownership, the deduction, when taken into account for budget planning, allows the buyer to buy a little bigger and better than her net income will allow. Call it a subsidy, if you will.
“NAR President Ron Phipps, states, "Recent progress has been made in bringing stability to the housing market and any changes to the MID now or in the future could critically erode home prices and the value of homes by as much as 15 percent, according to our research. This would negatively impact home ownership for millions of Americans, including those who own their homes outright and have no mortgage."
“Will Washington continue to allow taxpayers who own their homes to reduce their taxable income by the interest paid on the loan? Time will tell. It is dependent on finding alternative ways to curb growing anxiety over our growing debt.”
Good luck to us all.

Read the full Realty Times article.

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

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