Will Mortgage Interest Stay Deductible?

Mortgage News
Will Mortgage Interest Stay Deductible?
HAM_main_1stQtr13_01.jpgWhen the federal tax code was established in 1913, all interest was deductible on personal tax returns. But other than farmers, very few people even had a mortgage. In 1986, Congress overhauled the tax code, eliminating the interest deduction for nearly all consumer debt (auto, credit card, and personal loans) while lobbying from the real estate and mortgage industries kept the mortgage interest deduction intact for residential real estate.

The question is back before Congress. A recent NAR poll reported that 79% of Americans want the mortgage deduction to stay put and real estate lobbyists say losing it would jeopardize a still-fragile housing recovery. Those opposed say it inflates house prices and the loss would only really impact the wealthy (only 25% of Americans itemize their tax return, the rest take the standard deduction).

Congress took some middle ground in January, boosting the tax rate for single filers who earn more than $400,000 and married filing jointly who earn more than $450,000 (the top 1% of filers). Other provisions reduced the value of mortgage interest and state income–tax payments–another roughly 3% of filers–to $250,000 for singles and $300,000 for married couples. For the time being, that’s the limit of the takeaway.

Currently, home buyers are much better off than they were as far back as the 1970s, considering today’s home affordability and historically-low home loan rates.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s