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Nar Alert Re Mortgage Interest Deduction

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Mike Kennedy

Elite Member
Joined
Sep 28, 2003
Professional Status
Certified Residential Appraiser
State
New York
Pending tax reform plans threaten to wipe out the tax benefits of owning a home for 95% of American families.
Tell Congress: Reform our tax code AND protect middle class homeowners.

mid-2016, House Speaker Paul Ryan (R-WI) and Ways and Means Chairman Kevin Brady (R-TX) released a fairly comprehensive tax reform plan outline known as the “Blueprint” that included many of the features of the Camp plan. The Blueprint would almost double the standard deduction and eliminate the deduction for state and local taxes paid, along with other itemized deductions, except the MID and the deduction for charitable contributions. The effect of this plan would be the same as that from the Camp plan from 2014 – an 85 percent reduction in the benefit of the mortgage interest deduction, along with a 100 percent reduction in the property tax deduction.


https://www.nar.realtor/tax-reform
 

Michael S

Senior Member
Joined
Mar 18, 2009
Professional Status
Certified General Appraiser
State
New Mexico
Stop subsidizing mortgages for high cost of living areas and maybe prices will actually drop a bit to make things more affordable. I'm opposed to subsidizing debt in general and this really only helps those taking out mortgages on the upper end of the market or in expensive areas. A typical $200,000 home with a $180,000 mortgage for a family making $50,000 won't really see much benefit from itemized deductions with the MID versus the standard deduction. This incentivizes keeping a large mortgage as the deduction will decrease as you pay down the balance and pay less and less interest.
 
D

Deleted member 134708

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Get rid of all deductions.

Mortgage deductions is favoring a group of people. Not cool. Why are folks in favor of singling groups out or classifying them? Aren't we all just human and should be seen by the Gov. as 100% equal?

Make $5,000? x by .15 = done

Make $50,000? x by .15 = done

Make $100,000? x by .15 = done

Make $1,000,000,000? x by .15 = done.
 
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Gobears81

Senior Member
Joined
Nov 7, 2013
Professional Status
Certified General Appraiser
State
Illinois
Stop subsidizing mortgages for high cost of living areas and maybe prices will actually drop a bit to make things more affordable. I'm opposed to subsidizing debt in general and this really only helps those taking out mortgages on the upper end of the market or in expensive areas. A typical $200,000 home with a $180,000 mortgage for a family making $50,000 won't really see much benefit from itemized deductions with the MID versus the standard deduction. This incentivizes keeping a large mortgage as the deduction will decrease as you pay down the balance and pay less and less interest.
I think in principle, you are spot on. Maybe I'm biased from being in a low cost of living area, but it is hard for me to grasp how so many are willing to pay what they do in some of the higher COL areas and don't doubt that there is an artificially propped up element in many cases, perhaps by this very issue.
With that said, there is a human element on why markets aren't 100% perfect or efficient. A market can go up 100% in price unabated, but if it drops 25% even after a 100% increase, that's a problem, simply because the tendency of many homeowners to leverage out as much as possible. So if prices drop 25%, those that got 80% LTV mortgages at the top of the market suddenly have negative equity. That's of course nothing new to tell you or anyone else reading this, but it is a big reason why prices in declining markets do not indicate a smooth downward slope. When I did more residential work, I saw how they might have a gulf of activity then after a point, the glut of foreclosures start working their way through, which hurt housing prices even more.
But FWIW, I do not oppose eliminating the mortgage interest deduction, my discussion above is just to point out that it may be messy at first. Of course, that'll be the point probably made by lobbyists, who will probably succeed in keeping in that deduction, the child deduction, 401k deduction, charity deduction, etc. But I'm also skeptical that this reform will actually happen.
 
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D

Deleted member 134708

Guest
If I was an alien overlord that made these stupid rules humans MUST! live by:

I'd go 20% sales tax and that's it. No filling taxes.

I wish humans were allowed to make the rules and laws that humans have to live under but that's just not the case. This is extremely obvious when you look at all laws and rules.
 
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Artemis Fowl

Senior Member
Joined
Mar 16, 2004
Professional Status
Certified Residential Appraiser
State
Michigan
If I was an alien overlord ...
I wish humans were allowed to make the rules and laws that humans have to live under but that's just not the case. This is extremely obvious when you look at all laws and rules.

Wait. Are you saying what I think you're saying?
We should lobby our lizard person congressional representative.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
If I was an alien overlord that made these stupid rules humans MUST! live by:

I'd go 20% sales tax and that's it. No filling taxes.
.
Sounds nice in theory, except that there would be huge collection issues as it would lead to a massive bartering economy and/or a major black market in just about everything (along with increased organized crime) as people would seek out ways to avoid paying the 20% sales tax.
 
D

Deleted member 134708

Guest
Sounds nice in theory, except that there would be huge collection issues as it would lead to a massive bartering economy and/or a major black market in just about everything (along with increased organized crime) as people would seek out ways to avoid paying the 20% sales tax.

Exactly. Fine by me. Cousin Vinny will protect my neighborhood hell of a lot better than 30 minute police response time it is current. I'll take simple economics. If it ain't Gov. I'm in.

I'll gladely fund the military and that's it. The rest should be private citizens taking care of it all.
 
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D

Deleted member 134708

Guest
The invention of the printing press caused massive destabilization, warfare etc for the 1st decade.

Point is, few eggs gonna get cracked when looking at it on a 1,000 year timeline.
 
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