{"id":3134,"date":"2017-09-24T09:47:44","date_gmt":"2017-09-24T13:47:44","guid":{"rendered":"http:\/\/dankrell.com\/blog\/?p=3134"},"modified":"2017-09-24T09:47:44","modified_gmt":"2017-09-24T13:47:44","slug":"mortgage-interest-deduction-last-chapter","status":"publish","type":"post","link":"https:\/\/dankrell.com\/blog\/2017\/09\/24\/mortgage-interest-deduction-last-chapter\/","title":{"rendered":"Mortgage Interest Deduction last chapter?"},"content":{"rendered":"
\"mortgage<\/a>
Mortgage interest deduction (infographic from keepingcurrentmatters.com)<\/figcaption><\/figure>\n

The mortgage interest deduction seems to be the everyone\u2019s lovable fiscal scapegoat.\u00a0 The mortgage interest deduction was almost abolished in 2010<\/a> as a means of increasing revenue after the recession.\u00a0 And then again in 2012<\/a> it\u2019s elimination was considered to increase revenue lost through sequestration.\u00a0 This time the mortgage interest deduction is in Congress\u2019 sights as a means of tax reform.<\/p>\n

The mortgage interest deduction is a remnant of consumer interest deductions that were allowed when income tax was first collected.\u00a0 It wasn\u2019t until the 1980\u2019s when most consumer interest deductions, such as credit card and auto loan interest, were eliminated (to reduce budget deficits after a deep recession).\u00a0 The mortgage interest deduction survived in a limited form, which implemented a cap on the amount of an individual\u2019s deductions.<\/p>\n

The mortgage interest deduction is again embattled.\u00a0 Reporting by AP\u2019s Marcy Gordon reveals the divide in eradicating the MID (GOP eyes popular tax breaks to finance overhaul<\/em><\/a>; apnews.com, September 18, 2017).\u00a0 The MID is viewed by some as a middle-class mainstay that is a political hot potato.\u00a0 While others see the MIS as an antiquated subsidy that can be removed as part of a major tax plan.\u00a0 However, the likelihood of totally abolishing the MID is slim because of the political fallout.\u00a0 More likely to occur is something akin to what happened in the 1980\u2019s, which was a narrowed version that limited deductions.\u00a0 Speaker of the House, Paul Ryan hinted that the current $1million cap could be further reduced, by saying \u201cWe could change that limit \u2014 I suppose<\/em>.\u201d<\/p>\n

Over the decades, the mortgage interest deduction has been criticized by some as poor economic policy. Those who argue against the mortgage interest deduction claim that it doesn\u2019t increase homeownership.\u00a0 They also claim that the MID is a subsidy that artificially inflates home prices, and is used mostly by the wealthy.\u00a0 Additionally, the enticement of receiving a MID at the end of the year is used to encourage home buyers to buy homes that they really can\u2019t afford.\u00a0 A recent study by Jonathon Gruber <\/a>(known to many as the architect of Obamacare), et al, produced results that mimics the assertions of the mortgage interest deduction critics\u2019 (Do People Respond to the Mortgage Interest Deduction? Quasi-Experimental Evidence from Denmark<\/em>; National Bureau of Economic Research, Inc; Working Paper 23600, July 2017).<\/p>\n

Proponents of the mortgage interest deduction, such as the National Association of Realtors, and the National Association of Home Builders, claim that the MID encourages homeownership and makes it affordable for many.<\/p>\n

As a witness in the September 13th<\/sup> Senate Finance Committee Hearing<\/a> on Individual Tax Reform, <\/strong>Iona Harris (chair of NAR\u2019s Federal Taxation Committee) testified<\/a> that limiting or abolishing the mortgage interest deduction could actually have the unintended consequence of increasing taxes on millions of \u201cmiddle class homeowners,\u201d while \u201cputting the value of their homes at risk.\u201d<\/p>\n

Ms. Harris stated:<\/p>\n

\n

\u201c…it is estimated that American homeowners already pay well over 80 percent of all federal income taxes<\/em>\u2026 53 percent of individuals claiming the itemized deduction for real estate taxes in 2014 earned less than $100,000<\/em>.<\/strong>\u201d<\/p>\n<\/blockquote>\n

And recapped the outcome of the 1980\u2019s mortgage interest deduction reduction:<\/p>\n

\n

\u201c\u2026When Congress last undertook major tax reform in 1986, it eliminated or significantly changed a large swath of tax provisions, including major real estate provisions, in order to lower rates, only to increase those rates just five years later in 1991\u2026Most of the eliminated tax provisions never returned and in the case of real estate, a major recession followed.<\/strong><\/em>\u201d<\/strong><\/p>\n<\/blockquote>\n

Copyright\u00a9 Dan Krell
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\nDisclaimer<\/a>. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.<\/p>\n","protected":false},"excerpt":{"rendered":"

The mortgage interest deduction seems to be the everyone\u2019s lovable fiscal scapegoat.\u00a0 The mortgage interest deduction was almost abolished in 2010 as a means of increasing revenue after the recession.\u00a0 And then again in 2012 it\u2019s elimination was considered to increase revenue lost through sequestration.\u00a0 This time the mortgage interest deduction is in Congress\u2019 sights … <\/p>\n

Continue reading “Mortgage Interest Deduction last chapter?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[419,406,262,293,13],"tags":[926,895,645,797],"class_list":["post-3134","post","type-post","status-publish","format-standard","hentry","category-home-owner","category-homeowner","category-homeownership","category-mortgage-interest-deduction","category-real-estate","tag-home-owner","tag-homeownership","tag-mortgage-interest-deduction-2","tag-real-estate"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p1VZLf-Oy","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/3134","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/comments?post=3134"}],"version-history":[{"count":7,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/3134\/revisions"}],"predecessor-version":[{"id":3142,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/posts\/3134\/revisions\/3142"}],"wp:attachment":[{"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/media?parent=3134"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/categories?post=3134"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dankrell.com\/blog\/wp-json\/wp\/v2\/tags?post=3134"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}