Here we are at "Tax Time" again and those of us that are homeowners still paying toward a mortgage are still able to claim a sizeable mortgage interest deduction which essentially saves many homeowners hundreds, if not thousands of dollars (cha-ching).
For decades the mortgage interest deduction (MID) has been used as a promoter of homeownership and healthy communities. The value of the deduction has risen and fallen tenfold over the past 50 years while the rates of homeownership have remained stable - between 63 and 68 percent.
Fact: The MID currently costs the treasury an estimated $131 billion in 2012 (or $210 billion if you add in ancillary tax breaks).
Opinion: Many have argued that aside from shrinking the deficit, phasing out the MID would provide a much-needed correction in the housing market.
President Obama has hinted several times between 2009-2010 that the mortgage interest deduction could possible be erradicated and/or replaced with a flat 12% tax, but still has offered no specifics for plans of possibly moving forward.
I suspect that the real estate industry would be extremely opposed the deduction. According to Michael Berman, chairman of the Mortgage Bankers Association, it's "one of the pillars of our national housing policy, and limiting its use will have negative repercussions for consumers and home values up and down the housing chain," (source: Housingwire.com)
Lawrence Yun, economist for the National Association of Realtors, even went so far as to tell the Wall Street Journal that ending the deduction would "surely put us in a broader economic recession."
Of course, I am a homeowner and therefore I am still in favor of the deduction. However, if a decrease in the deduction would benefit the greater good of the ecomony, I am all for "paying it forward" so to speak. I too, am of the feeling that completely erradicating the deduction would be a major step backward for the real estate industry and the ecomony as a whole.
I am interested to know what others think. I welcome your thoughts/comments.
