The Fate Of The Mortgage Interest Rate Deduction May Be In Question...

Tuesday, November 27, 2012 08:21
The Fate Of The Mortgage Interest Rate Deduction May Be In Question...

Tags: Congress | Economic Outlook | economy

The days of the mortgage interest deduction may be over or, at least, dimming.
Deductions may be the most convenient tool to break the stalemate in the compromise between Republicans and Democrats on the deficit and fiscal cliff issues.

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It would also provide extra revenues without having to raise tax rates, an aspect that particularly appeals to Republicans and an area where Democrats may be willing to compromise.
The National Association of Realtors considers the mortgage interest deduction vital to the stability of the housing market and the economy.
The ability to deduct mortgage interest has boosted the income of millions of families and adds support to the growth of the housing market, one of the areas said to be leading the current economic recovery.
The Obama administration has a greater focus on the wealthy and is proposing a deduction cap of 28% for households making more than $250,000.
Allowing current tax breaks to expire would also eliminate many deductions for the wealthy.
The Treasury Department estimates it could raise $749 billion over the next decade by limiting deductions for those earning higher incomes.
But middle income earners could also be affected and big-ticket homes tend to be more resilient to shocks than lower value homes.
No one knows exactly what effect eliminating the mortgage interest deduction would have but politicians may decide that targeting higher earners in capping the mortgage interest deduction may carry little risk.

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