14
Feb
11

Phasing Out Homeowners Tax Break, No Way!

Say WHAT!  That’s exactly what I said after reading an article in the NPR.  They say a growing number of experts are calling for an end to a massive tax break for homeowners, the mortgage interest tax deduction.  The tax break puts money into the pockets of millions of American homeowners.  Getting rid of it has been politically unthinkable.  But a growing number of economists and deficit-cutting commission are telling Congress the time has come to phase out this sacred tax break.  It’s not welcome news for those who work in real estate.  “Getting rid of the mortgage interest tas deduction would just kill the market,” says Wendy Rocca, a Realtor for Century 21.   Realtor Medea Palandjiam says she often explains to first-time home buyers how they can deduct the interest that they pay on their mortgage.  Without benefit, she says, it would make it much harder to buy.

But many economists are skeptical that the tax deduction really promotes homeownership.  They say the homeownership rate in the U.S. is about the same as  in Canada, Australia, and England.  And those countries don’t offer the tax break.

“The mortgage interest deduction, while many people gain from it, is not a wise use of our tax dollars at this point,” says Ted Gayer, an economist and former Treasury Department Official.  He says the problem is that the federal debt is now more than $14 million.  And many economists say the government as some point has to trim spending and raise more revenue to pay down debt.  Gayer says the mortgage tax break costs the government a ton of money.  “This is a biggie, you know the forecasts for the next few years range from $100 billion to $130 billion a year,” he says.  “So, you know, over a four-year period, you’re probably up around $500 billion.”

So will there be an end?  I hope not, I appreciate the deduction on my taxes too!

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Jennifer Ferri, Owner

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