Post by unlawflcombatnt on Oct 7, 2012 8:27:03 GMT -6
In addition to the general commentary provided below about the Mortgage Interest Rate Deduction, the excerpt below also includes some interesting historical and background information about the mortgage interest rate deduction.
Here are some of the salient points about the deduction, according to the article:
1) It applies to both 1st and 2nd homes.
2) It applies to up to $100K of home equity borrowing.
3) It applies to as much as $1 Million of mortgage value.
from the Orange County Register:
Should Mortgage Deduction Be Capped?
Oct 5, 2012
By MARILYN KALFUS
"Some California real estate agents at a Realtors convention in Anaheim said they worry that combining the mortgage interest deduction with several other ones to calculate a cap – an option floated this week by presidential candidate Mitt Romney – could hurt the housing recovery.
Romney made headlines leading up to the debate by suggesting in an interview with Denver TV station KDVR, “As an option you could say everybody's going to get up to a $17,000 deduction. And you could use your charitable deduction, your home mortgage deduction, or others – your health care deduction, and you can fill that bucket, if you will, that $17,000 bucket that way. And higher-income people might have a lower number.”
The Romney campaign later called the $17,000 sum an “illustrative example,” and Romney revised the lid at the debate, saying it could be $25,000, $50,000 or “make up a number.”....
Both President Barack Obama and Romney in the past have talked broadly about potentially scaling back the mortgage interest deduction for high-income homeowners or those with 2nd homes.
How would significantly cutting the deduction as part of a “bucket” affect the housing industry?
Some attending the California Association of Realtors event thought it would discourage homebuying, at least at first.
“I think initially everybody would do what they usually do, which is panic, because it's change,” said Paul Gonzales, branch manager of Troop Real Estate in Santa Clarita. “The first year, there would be angst in the marketplace. But for higher income people, it won't stop them from buying a house.”
Art Miro, a Realtor in Dana Point, considers the mortgage interest deduction a major catalyst for owning a home vs. renting and said drastically reducing it will hurt the market, especially for investors....
Good!. Reducing "investor" demand would be an excellent outcome. That's exactly what needs to be done if home prices are ever to become affordable again---reduce the excess demand from non-occupant buyers, thus reducing the price for potential occupant buyers.
But Miro, a Romney supporter, said he'll “definitely” still vote for the Republican, adding, “The main thing we need right now is jobs. Without jobs, we cannot sell houses.”....
The mortgage interest write-off, which dates to 1913, lets homeowners deduct mortgage interest for primary and second homes up to $1 million of a mortgage's value, and home equity interest debt up to $100,000. It's the largest subsidy for homeowners in the U.S. tax code.
The National Association of Homebuilders says the deduction is broadly used across income groups and geographic areas....
But others, including economists and academics, say it favors the rich and rewards people for getting into deeper debt with pricier homes.
Richard Green, director the Lusk Center for Real Estate at the University of Southern California, said in testimony before the U.S. Senate Finance Committee last fall that the deduction favors high-income Americans. He said “phasing out the mortgage interest deduction would encourage households to pay down their mortgages more quickly and would (cause them to) rely less on leverage … household deleveraging would lead to greater market stability.”
Here are some of the salient points about the deduction, according to the article:
1) It applies to both 1st and 2nd homes.
2) It applies to up to $100K of home equity borrowing.
3) It applies to as much as $1 Million of mortgage value.
from the Orange County Register:
Should Mortgage Deduction Be Capped?
Oct 5, 2012
By MARILYN KALFUS
"Some California real estate agents at a Realtors convention in Anaheim said they worry that combining the mortgage interest deduction with several other ones to calculate a cap – an option floated this week by presidential candidate Mitt Romney – could hurt the housing recovery.
Romney made headlines leading up to the debate by suggesting in an interview with Denver TV station KDVR, “As an option you could say everybody's going to get up to a $17,000 deduction. And you could use your charitable deduction, your home mortgage deduction, or others – your health care deduction, and you can fill that bucket, if you will, that $17,000 bucket that way. And higher-income people might have a lower number.”
The Romney campaign later called the $17,000 sum an “illustrative example,” and Romney revised the lid at the debate, saying it could be $25,000, $50,000 or “make up a number.”....
Both President Barack Obama and Romney in the past have talked broadly about potentially scaling back the mortgage interest deduction for high-income homeowners or those with 2nd homes.
How would significantly cutting the deduction as part of a “bucket” affect the housing industry?
Some attending the California Association of Realtors event thought it would discourage homebuying, at least at first.
“I think initially everybody would do what they usually do, which is panic, because it's change,” said Paul Gonzales, branch manager of Troop Real Estate in Santa Clarita. “The first year, there would be angst in the marketplace. But for higher income people, it won't stop them from buying a house.”
Art Miro, a Realtor in Dana Point, considers the mortgage interest deduction a major catalyst for owning a home vs. renting and said drastically reducing it will hurt the market, especially for investors....
Good!. Reducing "investor" demand would be an excellent outcome. That's exactly what needs to be done if home prices are ever to become affordable again---reduce the excess demand from non-occupant buyers, thus reducing the price for potential occupant buyers.
But Miro, a Romney supporter, said he'll “definitely” still vote for the Republican, adding, “The main thing we need right now is jobs. Without jobs, we cannot sell houses.”....
The mortgage interest write-off, which dates to 1913, lets homeowners deduct mortgage interest for primary and second homes up to $1 million of a mortgage's value, and home equity interest debt up to $100,000. It's the largest subsidy for homeowners in the U.S. tax code.
The National Association of Homebuilders says the deduction is broadly used across income groups and geographic areas....
But others, including economists and academics, say it favors the rich and rewards people for getting into deeper debt with pricier homes.
Richard Green, director the Lusk Center for Real Estate at the University of Southern California, said in testimony before the U.S. Senate Finance Committee last fall that the deduction favors high-income Americans. He said “phasing out the mortgage interest deduction would encourage households to pay down their mortgages more quickly and would (cause them to) rely less on leverage … household deleveraging would lead to greater market stability.”