What’s Happening to the Mortgage Interest Deduction for Homeowners?

The Obama administration is trying, once again, to limit the amount of interest taxpayers can deduct when itemizing deductions on their federal income tax returns. One option would exclude citizens from deducting interest payments on second residences, home equity loans or mortgages over $500,000.

Similar proposals have been made in the past two years but Congress did not approve the cuts.

Home ownership has been the American dream since long before I was born. The income tax deduction for mortgage interest is what makes ownership possible for many people.

Perhaps not in Arkansas as much as, let’s say, California or several other states, a $500,000 home is not a mansion. Indeed, it is more the norm for average families.

Everyone knows our country is deeply in debt. We must find sensible ways to cut spending and increase income. I just don’t believe homing in on average people trying to live a decent life in America is the way to do it.

Our government spent billions of dollars in “bailout” funds to big businesses, large banks, and other large firms which were deemed “too important to fail.” It continues to spend billions on unpopular wars. Does that somehow equate to letting American families fail?

Usually I prefer to not get too political here in my blog, but I must speak out. Yes, the current proposal to limit interest deductions is for mostly high-income people with high dollar homes, but where will it stop? It is one of the few deductions that “normal” middle class people have. The deduction has been around since 1913. That’s 98 years of helping families to stop paying endless rent and instead own their own homes.

The National Association of Realtors has indicated that the interest deduction is one factor bringing stability to the housing market. Limiting it at this time will create serious problems for consumers and worsen the entire real estate market. The trickle-down effect could be catastrophic.

For more information:

Realty Times
Fox News
Housingwire1
Housingwire2
Housingwire3