Limiting Or Removing The Mortgage Interest Deduction

Limiting Or Removing The Mortgage Interest Deduction

Limiting Or Removing The Mortgage Interest Deduction

Will The Federal Government Change The Property Tax Write Off?

With all of current real estate talk about the expiring Mortgage Debt Forgiveness Relief Act another issue continues to rise in the real estate world – limiting the mortgage interest deduction.

Without getting too political some of the talk about limiting or eliminating the limit the mortgage interest deduction continues to gain interest because of the fact that abolishing the deductions can be a much needed source of revenue for the federal government.

How much does the mortgage deduction cost the federal government?  According to estimates from the congressional Joint Committee on Taxation, the deduction will cost the federal government $484.1 billion from fiscal 2010 to 2014 — $98.5 billion in 2013 and $106.8 billion in 2014, Additionally, homeowners write-offs of local and state property taxes account for an additional $120.9 billion during the same four-year period.

Of course, the income that would benefit the federal and state governments would impact homeowners and the fragile real estate market. The tax deduction remains one of the key reasons why people buy homes.

Taking Advantage Of The Mortgage Deduction

Not every homeowner takes advantage of the itemized mortgage deduction. The IRS released data in 2009 about the mortgage deductions which revealed that only 15% of households with incomes below $50,000 took itemized deductions, while 65% of those with incomes between $50,000 and $200,000 did. For those with incomes above $200,000 the figure rose to 96%.

Consider the consequences of changing the write off when comparing state-by-state. The Tax Foundation, a nonpartisan research group in Washington, D.C., created a study based on the 2009 IRS data and found residents of states with high housing costs (like California) write off the most and therefore any cutbacks in the tax law would greatly impact them.  It came as no surprise that with the prices here in California that the state ranked No. 1 in the size of home mortgage deductions, with $18,876 on average.

We will have to wait until next year to see what changes, if any, arise in this time of reduced revenue and cutbacks.

Limiting Or Removing The Mortgage Interest Deduction

Limiting Or Removing The Mortgage Interest Deduction

Limiting Or Removing The Mortgage Interest Deduction

Limiting Or Removing The Mortgage Interest Deduction

Limiting Or Removing The Mortgage Interest Deduction

Limiting Or Removing The Mortgage Interest Deduction

Limiting Or Removing The Mortgage Interest Deduction

Limiting Or Removing The Mortgage Interest Deduction

Limiting Or Removing The Mortgage Interest Deduction

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1 Comment

Filed under California, Mortgages, Tax Credits

One response to “Limiting Or Removing The Mortgage Interest Deduction

  1. Pingback: Will The Mortgage Interest Deduction Be Pushed Off Of The Fiscal Cliff? | Resource Blog

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