Home Mortgage Interest Deductions To Be Reduced
Obama vs. real estate
With “hope and change,” Obama is whipping out new programs, rescue packages, bailouts, etc. Unquestionably, he thinks all these expenditures will produce a healthier economy or at least provide help where needed. Huge budget deficits are burgeoning and the Obama administration is forced to seek new revenue sources. Obama’s current budget will reduce home mortgage interest deductions and funnel money towards helping these building deficits.
The initial steps will affect the higher earners, but once the door is open, what will stop the earning caps from being reduced until the final elimination? Am I stretching the truth on this topic?
The idea that elimination of the home mortgage deduction will not affect home ownership is already being discussed. Those in favor of reducing/removing the home mortgage deduction mention the fact that Canada, the United Kingdom and Australia do not provide mortgage interest rate deductions but still have roughly similar homeownership rates as the United States. Another added perk is the advancement of Obama’s stated goal for wealth re-distribution.
In part, here is what the Obama budget says: “The Administration’s Budget includes a proposal to limit the tax rate at which high-income taxpayers can take itemized deductions to 28 percent — and the initial reserve fund would be funded in part through this provision. This provision would raise $318 billion over 10 years.”
With the Administration’s stated intent to use any perceived crisis to push through legislation that otherwise would be political suicide, here is some of the current rhetoric surrounding homeownership:
A. Slash deductions for homeowner mortgage interest from the present $1.1 million limit to $500,000, phased in with $100,000 annual reductions starting in 2013, and extending to 2019. Under current law, taxpayers can write off mortgage interest on their principal home debt up to $100,000.
B. The maximum mortgage debt amount would shrink yearly until it hit $500,000. Over a 10-year period, this change alone would boost federal tax collections by an estimated $41 billion.
C. Replace the current mortgage interest deduction with a flat 15 percent tax credit for everyone with mortgage amounts below the declining limits in the first (A) option above. Rather than taking write-offs that are tied to your personal income tax bracket, every homeowner would get a credit worth 15 percent of mortgage interest paid.
While initially raising $13 billion in 2013, it is estimated that moving to a credit approach would increase revenue by nearly $390 billion between 2013 and 2019.
Many real estate professionals optimistically voted for Obama. To those, I ask this question: Is this the “hope and change” you expected?
La Jolla California real estate agent
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Everything will be alright, I believe in our President!
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The only way to pay that off is massive inflation– 10-15% every year for 6-8 years. Worst part is the next President will take the fall for Greed the scope of which the world has never seen. So hold on to that house if you can, in a few years it will be worth three times its present value and that mortgage you can’t afford will represent a year’s salary.
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To those who think only low income people are losing their homes. WRONG….middle-class folks are losing their homes MORE than low income folks are. I think it makes some people feel good to try to put a rationale on this that it has to be people with low income, than to accept the fact that it is middle income folks more so.
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Obama is a dumba$$ i don’t know who in their right mind would vote for this guy…….
I am not sure I understand your atricle- are you For or Against the MID reduction?
when you say “While initially raising $13 billion in 2013, it is estimated that moving to a credit approach would increase revenue by nearly $390 billion between 2013 and 2019″ Is that not a good thing? I read recently “The way the tax code is currently structured, individuals may deduct the interest from their home loans from their taxable income. Many Americans fail to benefit from this, as the standard deduction allowed all taxpayers often equals or exceeds the mortgage interest, effectively rendering it a non-deduction” so if there is some truth to this wouldn’t a restructering that could benefit the country by “$390 billion” be a could thing? I am not the quickest person just trying to understanding what this will do not only to our industry but to our country. Being an American I tend to want what is best for the whole country to just what is best for me.
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