Your Mortgage Interest Deduction Could Be At Risk
The origin of the mortgage interest deduction can be traced all the way back to 1894 and the beginning of tax interest deductions. Today the mortgage interest deduction is considered a core benefit of home ownership. Individuals are able to deduct the interest on mortgage debt up to $1 million on a primary residence and a secondary one combined. One can also deduct interest on a line of credit up to $100,000. Sounds fair, right? Well, with the recent downturn of the economy Congress is considering drastic measures to improve the budget deficit and one such measure is to reduce or eliminate the mortgage interest deduction.
Despite the fact that the mortgage interest deduction has been part of the federal tax code for over 100 years, the deduction is suddenly considered to be part of the budget deficit problem and some have suggested that reducing or eliminating the mortgage tax deduction will provide some economic relief to our country. Supporters of this solution also believe that the deduction primarily benefits wealthy homeowners and is far too costly at a time when our national debt is of great concern. Many, however, deliver a different story.
Experts have stated that claims of the mortgage interest deduction benefiting only the rich is quite a misconception. According to the chief economist for the National Association of Realtors, Lawrence Yun, 65 percent of families claiming the mortgage interest deduction earn less than $100,000 and 91 percent earn less than $200,000. These numbers lend to the argument that the deduction is beneficial to all homeowners, regardless of their economic classification.
The mortgage interest deduction has become a mainstay in our country. It enhances the affordability of home ownership for many and could be considered critical to the recovery of the US Housing market. Millions of Americans buy their homes with the understanding that the mortgage interest is deductible and lessens the financial burden of owning a home.
“It’s in the national interest to encourage home ownership,” stated Ron Phipps, the President of the National Association of Realtors. “Recent proposals to reduce or eliminate the mortgage interest deduction and remove government support of the housing finance market could have disastrous consequences for the economy, not to mention making it harder or nearly impossible for millions of families to own their own homes. We believe America must continue to invest in home ownership, for the future of our families and our nation.”
This topic is being actively discussed on Capitol Hill and several groups have been created to modify the tax system. With many deductions under review, the mortgage interest deduction is at risk of being eliminated or reduced. If you are a homeowner or prospective homeowner that supports the continuation of the mortgage interest deduction, it is important to let your federal lawmakers in Congress know. Write a letter or email your thoughts and concerns today.