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Home Builders Association Softens Its Resistance To Mortgage Interest Tax-deduction Changes

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hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
Home mortgage interest deductions have already been capped. Standard deduction has been increased. After proposed tax change of doubling standard deduction along with making sure the rich don't benefit, it won't be surprising to see the mortgage interest deduction along with the elimination of state and local taxes become impotent.
 

jay trotta

Elite Member
Joined
Feb 8, 2004
Professional Status
Certified Residential Appraiser
State
Connecticut
NAHB will have an even tougher Sell, the Mortgage Deduction is an Incentive / so now your looking at "No Return" on your investment ?? Brilliant
 

OSU Beavers

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Joined
Jan 10, 2007
Professional Status
Licensed Appraiser
State
Oregon
I don't make enough to itemize federally, but the Mortgage Interest Tax-deduction takes a chunk out of my State income tax amount.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Having benefited from the mortgage interest deduction for more than 30 years, and recognizing that one of its original intentions was to encourage home ownership, in the same breath I have to acknowledge that it isn't equitable.
The new proposal increases the standard deduction which would benefit all taxpayers (homeowners and non-owners of homes).

In theory, for existing homeowners, total occupancy costs wouldn't change that much: they'd lose the interest deduction and gain an increase in the standard deduction.
In theory, for first-time homeowners, they'd gain no benefit by purchasing a home: their standard deduction is the same with or without home ownership.

Purchase of a home for primary occupancy shouldn't be a tax-based decision (IMNSHO). Eliminating the mortgage interest deduction and doubling the standard deduction transfers the focus on the tax savings away from the housing industry and into the general economy. That sounds fair and equitable to me.
 
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leasedfee

Member
Joined
Oct 14, 2007
Professional Status
Certified General Appraiser
State
Colorado
From what I can tell, the effect of the mortgage deduction was to merely push real estate values higher. More income to chase the same property. Ran some numbers and the deduction worked out to be about a <1% affect upon a mortgage interest rate. Get rid of it, nationally values would take a hit, then restabilize, and then resume their original trajectory. Home builders would resume building; brokers selling.

Is it a good national policy to encourage people to buy a home, perhaps yes. Behavioral economics: Paying off a home is a forced savings account of sorts as a majority cannot save money. True, you buy one house for the bankers in addition to house you buy for yourself -- but you do the same if you're a tenant. Yet we saw 65 yos taking out 30 year mortgages at the peak of the bubble. Lady your home should be free and clear. What'da going to do at 75 if you're upside down and cannot work? Smack my head. Is the deduction limited to your one primary home, or does it apply to all houses in your estate?
 

Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
Winners and losers. Policy giveth and policy taketh. Savers have been severely punished over the last 8 years. That has muted growth. We have fake markets in junk bonds and other securities propped up by the federal reserve zero interest rates and QE.

Don't look now but the entire pension system is not functioning because they can't get suitable returns.
 
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