Bizmology |
Can real estate survive without mortgage tax deduction? Posted: 06 Dec 2010 04:00 AM PST The real estate industry faces another blow. In the wake of the housing market collapse, the tight credit market, the foreclosure robo-signing scandal, and falling house prices, now another storm looms on the horizon: the National Commission on Fiscal Responsibility and Reform may recommend that the government trim down the mortgage tax deduction as a way to help trim the more than $1 trillion deficit. Here's what the National Association of Realtors has to say:
The commission's recommendations don't eliminate the mortgage deduction entirely but would limit it to principle residences only, for mortgages capped at $500,000 (the current limit is $1 million). No longer would second homes or equity loans be eligible for the deduction. Although the mortgage deduction is a big incentive for homebuyers, it only benefits taxpayers who itemize, and so many homeowners do not actually take the deduction. Still, it will no doubt be perceived as a tax hike on homeowners, which will further hinder the recovery of the housing market. Pundits pro and con have been weighing in on the proposal. Those in favor include Brookings Institution senior fellow Alan Mallach, who said that research has shown that the deduction doesn't actually increase homeownership, its primary goal. If that's the case, then the deduction is a waste of uncollected revenue. Those opposed, such as National Association of Home Builders president Bob Jones, say now is not the time to be making changes. The housing industry has taken it on the chin for long enough. Homeowners who are making payments on houses that have lost much of their value in the crash would see their homes lose even more value, increasing the number of foreclosures. The commission's full report can be found here: The Moment of Truth. The mortgage deduction is not the only sacred cow being sacrificed, as a glance through the document shows. That's not likely to reconcile the real estate industry to its recommendation, however. ~ Photo by Jim Brickett, used under a Creative Commons license. |
You are subscribed to email updates from Bizmology To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
Google Inc., 20 West Kinzie, Chicago IL USA 60610 |
No comments:
Post a Comment