As you probably know, there are a lot of issues on the
table in Washington
that stand to affect homeowners as well as home-buying and -selling consumers.
One such issue involves a growing debate over the future of the Mortgage
Interest Deduction (MID).
Introduced along with the Income Tax in 1913, the MID allows homeowners who
itemize their taxes to deduct mortgage interest attributable to their primary
residence and second-home debt totaling $1 million, and interest paid on home
equity debt up to $100,000. Though the MID is a popular tax deduction for
millions of U.S.
homeowners, it has become a controversial topic in recent years. Many feel that
the MID helped contribute to the housing bubble in the mid-2000s.
Lawrence Yun, the chief economist for the National Association of REALTORS®
(NAR)—the largest professional association in the country—took part in a panel
hosted by the Tax Policy Center, a joint venture of the Urban Institute and
Brookings Institute, and the Reason Foundation. Held in Washington, D.C.
this past July, the "Rethinking the Mortgage Interest Deduction"
forum provided Yun with a platform to emphasize that any changes to the MID,
now or in the future, could threaten the progress made in stabilizing the
housing market, and potentially erode home prices and values.
“NAR firmly believes that the mortgage interest deduction is vital to the
stability of the American housing market and economy,” said Yun during the
forum. “The MID facilitates homeownership by reducing the carrying costs of
owning a home, and it makes a real difference to hard-working, middle-class
According to HouseLogic, having a tax deduction for mortgage interest makes
owning a home more affordable because the deduction lowers the amount of tax
you pay. U.S. Census data shows 37% of homeowners with mortgages spend more
than 30% of their income for housing. Saving on these costs is critical for
homeowners as it allows them to allot funds for savings and other expenses.
Therefore, while policy makers are considering eliminating the MID, Yun
believes that such a move would lower the homeownership rate in the U.S.
“While we must ensure that the conditions that led to the artificially inflated
homeownership rate of the bubble years do not resurface, we also need to create
the conditions for sustainable homeownership,” he explained.
Reducing or eliminating the MID is a de facto tax increase on homeowners, who
already pay 80-90% of U.S. federal income tax, said Yun, adding that that share
could rise to 95% if the MID is eliminated.
Yun also asserted that it’s a misconception that only the wealthy benefit from
the MID, when in reality it benefits primarily middle- and lower income
families. Almost two-thirds of those who claim the MID are middle-income
earners and 91% of people who claim the MID earn less than $200,000 per year.
Duane Duggan & Tammy MilanoThe Boulder Property Networkat RE/MAX of Boulder 2425 Canyon Blvd. Suite #110Boulder, CO 80302303-441-5611303-441-5612800-825-7000 firstname.lastname@example.org email@example.com
Radon Information | The Boulder Property Network | Getting the Highest Price | Free Home Valuation | COLLEGE STUDENT HOUSING! | INVESTOR Info | Need a REALTOR Referral? | ONLINE NEWSLETTER | RELOCATION Resources | Real Estate SEMINARS! | Search Local/Nationwide Listings | Duane's Timely Topics! | VIDEOS of Boulder County | CREDIT SCORE INFO | Business Referral Directory | Client Testimonials! | Why Buy Now? | CONTACT INFO | Meet Duane & Tammy | MORTGAGE CALCULATORS | Our Current Listings | Home Buyer Checklist | Real Estate Glossary | Home Page | Duane's BLOG !