Heads up homeowners: Mortgage interest deduction on Trumps chopping block

[applegrove]

Heads up homeowners: Mortgage interest deduction on Trump’s chopping block

by Diana Olick at Reality Check

http://www.cnbc.com/2016/12/01/heads-up-homeowners-mortgage-interest-deduction-on-trumps-chopping-block.html

"SNIP............


For more than a century, homeownership has come with a small bonus: The mortgage interest deduction.

It allows borrowers to deduct the interest paid on their home loans from their income taxes. Real estate agents, homebuilders and mortgage lenders have long used it as a selling point. Every so often it comes up in debate, but it is so popular that lawmakers are more than a little bit afraid to touch it. The future Trump administration apparently is not.

"We'll cap the mortgage interest, but we'll allow some deductibility," said Steve Mnuchin on CNBC Wednesday after confirming that has been asked by President-elect Donald Trump to head the Treasury Department.

The mortgage interest deduction is already capped at loans up to $1 million if you're married and filing jointly, and at $500,000 if you file separately. That said, the median price of a home in the United States is just more than $200,000, so not a lot of people make it to that cap. The vast majority of those who do benefit earn more than $100,000 a year and are not the most cost-burdened homeowners.

The deduction is very popular, but it benefits far fewer taxpayers than one might think. The current homeownership rate is around 62 percent, but of those homeowners, one-third do not have a mortgage. They own their homes outright, so the deduction would not apply to them.


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[DesertFlower]

1. many people will lose their homes without

that deduction. we never could have afforded our first home without it.

[Tikki]

2. Rents will go up higher yet. But who cares if high rents keep people from saving to buy a home!!!

Let's see if trump can get homeownership to below 50% by the end...

Who wins?

Tikki

[PoliticAverse]

4. Housing prices would likely drop causing rents to do so also. n/t

[Tikki]

9. Not where I live....Housing costs would have to be near bottom in my part of So Cal.

We went through this before when reagan began cutting out some middle class deductions.

Renters were fleeing to the outback.
Buying a cheaper house doesn't get you through the door in some places when you are ready to move back or move up.



Tikki

[PoliticAverse]

3. Good. It is a great subsidy for banks and raises housing prices...

http://www.economist.com/news/leaders/21651213-subsidies-make-borrowing-irresistible-need-be-phased-out-great-distortion

[Tarheel_Dem]

5. Prior to buying my home, I always had to write a check to the IRS. Since owning my home, I get a...

few hundred bucks back. That will really suck if it happens.

[Cicada]

6. Too good to be true

This deduction helps the affluent far more than it helps others. A refundable credit of 10% would be better, phased in over 10 years perhaps.

Sine it is more valuable to the affluent nothing will change.

The real tax benefit on average is zero. The value of the tax break simply causes home prices to be higher than they would be were there no mortgage interest deduction. If your tax bracket is high you get more benefit than you pay for in the purchase price. If your tax bracket is low you pay more for the value of the tax break than you get on your tax returns.

It's a bad idea that is not going to change.

[roamer65]

7. It will crash the housing market.

[lindysalsagal]

8. He's going to step on his own D($%

And this is just one example.

He'll be the best thing that ever happened to the DNC. Give him time.

[kelly1mm]

10. Awesome! The Mortage Interest Deduction distorts the housing market and benefits the rich

and upper middle class much more than the working class.

[roamer65]

11. Just wait until the housing market crashes and all those home related jobs go "bye bye".

[TheBlackAdder]

12. IN the meantime, the wealthy will take their foreign stashed money and become new land barons.