Mortgage Interest Deduction at Risk

this would never pass. they know it would kill any hope of a real estate recovery. its here to stay. atleast for the foreseeable future.

This would literally slash housing values by 20%+ across the board, probably even more...especially at the $500k-$1.5 million level that is the heart of the Manhattan housing market.

Not a chance in hell this will pass.

Same was said of bush tax cuts. No worries, it'll be 'permanent'! Fking laughing my azz off.

Hey how about this as a compromise?
1) no boat, rv, 2nd home deduction;
2) mortgages over $500k and or complete elimination of mortgage deduct for ppl in the top 1% of income/assets?

Seems pretty passable to me. But then again, I understand how 99% of citizens outside of manhattan think. It'll be get back at nyc bankers tax change laws. -simple really-

i could see elimination for people making over 250k a year or something like that, but not an outright elimination of it.

I don't see this as remotely in the realm of reality. The Federal Reserve is spending billions of dollars to prop up asset prices(read residential real estate). So even if ending the interest rate deduction makes tax sense(and it does), it will not come to pass.

oh but it would be so much fun to ask brokers to squirm around bringing it up in a price negotiation.

Actually more to the point. The gov't is worried that people more people will stop paying their mortgage and strategically default. Taking away the deduction could cause more people to throw in the towel.

And even more to the point, People who don't pay mortgages, don't pay real estate taxes, which is an even bigger concern right now. I have no idea why the WSJ even entertains a story like this. In the 1930's the last time we had so many unpaid mortgages various states instituted foreclosure moratoriums, effectively saying, "OK don't pay your mortgage, but please pay your real estate tax bill"

But I thought $15k credit only affected lower end, river? Flmaoz. So many forked tongues.

Please eliminate it, and all the other deductions. A flat tax for income over 50k(15%) and all the accountants and tax lieyers can drop dead.

The U.S. TAX code is one big imbroglio.

I think the "impossibility" of such a move is overblown. The powers that be already consider salaries over $250k to be the provenance of the rich. Why not end the deduction at a certain income level? They do it for so many other benefits that today a person faces huge marginal tax rates when they get into certain income ranges. These marginal rates depend on household and income level but they can be as much as 80-90% when some new income rates are hit and other benefits expire. It is only after you are past this zone (something like $120-140k for a 4 person household) that marginal rates drop down to the 40-50% range of tax rates.

So why not an end (or phase out) of the mortgage interest benefit? Do you think there are a large number of voters who would be affected?

Ironically, though these deductions benefit coast more (as in many more Democrats) it is possible those affected would be better protected by republicans who don't seem to believe in taxing the "rich".

just just just... take it all comrade!

Wait I'm confused, are we supposed to be motivated to succeed, or not?

Good day! Excelsior!

Imbroglio? If you and julialarge were to get it on with her finnish boyfriend who won't put a ring on it. How would an imbroglio looke like?

it's absolutely doable to eliminate the benefit for mtg above the old conforming limit $417k, remember the avg homeowner in USA lives in a house that cost now less than $200k

Riversider, the rest of the country already helped NYC enough through the bank bail outs. no need to be a total dead-weight.

"The tax benefits are hugely popular with the public but they have drawn the panel's focus, in part because the White House has said these and other breaks cost the government about $1 trillion a year."

lmao! hugely popular? the most popular thing is to take the std deduction. give me a break! maybe it's popular among WSJ readership.

my 2 cents: the mtg deduction will be limit either by income (means testing) or by the size of the loan.

"The White House said this month that the budget deficit for the last fiscal year was $1.3 trillion, the second highest in 60 years. The government's revenue was roughly $2.16 trillion in the year ended Sept. 30, compared with $3.46 trillion in outlays."

that means gov spent 50% more than revenue? the last one out please turn off the lights...

Notadmin, I'm in the camp that believes the deduction is a subsidy, I jsut don't see the political will in Washington for this, nor do believe it would get teh support of Geithner or Bernanke. Even Barney Frank has said he does not support this.

I think you are confusing your thoughts on the need for this, with the analyiss on what Washington is likely to do here. And if The Republican's retake the house as is forecast, then taking away the deductin is even more remote.

And saying again, personally I believe the tax code and various subsidies on housing helped promote the bubble.

riversider, read the above: that means gov spent 50% more than revenue? the last one out please turn off the lights...

so, significant cuts are coming. do you think that, for ex, cutting medicare and social security is easier for congress than mean testing this deduction? i don't agree with you if so

imho congress will cut following the path of least resistance. how many households take this deduction on properties $400k and up as a % of the population?

mortage deduction ceiling currently at 1mm - next stop 729k

it'll end up matching comforming loans imho, whatever that limit will end up being

this is not a new topic btw, but wonder whether homebuyers are adjusting for a future change in this:

http://www.nytimes.com/2005/10/11/politics/11cnd-tax.html?_r=1&hp&ex=112

Taxpayers can now deduct all the interest on mortgage loans up to $1 million. One proposal discussed today would cap the deduction at the maximum mortgage the Federal Housing Administration will insure. That level changes each year and varies depending on housing costs in each county, with a maximum loan limit now of $312,895 in communities where housing is most expensive and a national average of $244,000, according to a housing administration spokesman.

Another proposal under consideration was to change the interest deduction to a credit, meaning that taxpayers with the same size mortgage payments would get the same tax break regardless of what tax bracket they were in.

A third idea was to limit the deduction to 15 percent or 25 percent of a taxpayer's mortgage interest. The wealthiest taxpayers can now deduct 35 percent.
=========================

another possibility to increase revenues: "a limit on the deduction of state and local income taxes"

that's it! I have decided to save money by not making any.

actually there are a ton of papers on 2nd earner participation on the labor force and how sensitive it is to changes in marginal tax rates. case in point if FICA, with baby boomers retiring, without cutting entitlements to retirees FICA will have to near double, hence it will not pay to work for many 2nd earners.

wonder if the housing break changes, how would that affect women (and 67th) labor force participation in expensive areas. the cliche used to be that you have to be double income to afford a house in a good school district. without inflated prices, that might end up not being true, hence 1 income will be more than enough.

That's like a borker saying they won't sell re bc it's too hard.

My guess is that the mortgage interest deduction will behave like many other deductions / exemptions, etc. - phased out at certain income levels. Make less than $200,000 - 100% of interest expense up to a set amount will be deductible, 200 k - 250k - 80% deductible and so on. Only mortgages on first, owner occupied homes will be considered. The so called home equity loan exemption should be ended asap.

Would never get 60 votes in the senate. The GOP has demonstrated that they are willing to raise taxes on 99% of the country if they can't get a cut for the 1%, they would never roll over on this.

> Would never get 60 votes in the senate. The GOP has demonstrated that they are willing to raise taxes on 99% of the country if they can't get a cut for the 1%, they would never roll over on this.

not true, the 1st recommendation to cut this deduction was on 2005 under Bush, the GOP doesn't like it.

> The so called home equity loan exemption should be ended asap.

100% agree!!!!

Another reason why this would fail is the real National Association of Home Builders and the National Association of Realtors would not support and would back that up with their campaign contributions.

are they stronger than the AARP? the $ that more retirees will need has to come from somewhere Riversider.

But what if you are an old re borker? Ali?

aw come on! let's redistribute more wealth!

Notadmin,
The reason we have our economic predicament is because as a country we spend or than we save. Taxing the saving class would not seem to be a step in the right direction. Seems cutting entitlement spending makes more sense.
And AARP has high income members, so not sure which side they come down on. AARP also has an unresolved issue with regards to health care, where leadership was for and dues paying members against. Going against its members wishes twice could be disastrous.
But again, why are using the tax code to redistribute income and distort investment decisions. End the this once and for all and go with a flat tax!

Rewriting my previous comment, I meant we consumer too much and save too little. Taxing and redistributing money from the savers to the consumers would not remedy that.

But bubble redistribution! Bring on baby, right river? Flmaozz

As a career, re borkering has got to be the greatest 'income' redistribution mechanism in the us. Anyone else agree?

> The reason we have our economic predicament is because as a country we spend or than we save. Taxing the saving class would not seem to be a step in the right direction.

correct. why on earth do you think that subsidizing DEBT helps prevent people from consuming and gives incentives to saving!?!?!? MORTGAGES ARE DEBT (the opposite of saving that is), get it?

> Seems cutting entitlement spending makes more sense.

oh! but congress is not about sense hence current predicament. it's about the path of least resistance. i do believe grandma will shout louder than jumbo homedebtors. i might be wrong, this is just my opinion.

gcondo...from each according to their abilities to each according to their neediness?
We are not headed to Communism.
We are on our way to Big Brother style government ala 1984.
WHO ARE YOUR CONTACTS, YOUR ASSOCIATES, YOUR ACCOMPLICES???
Oh, here they are on facebook, all neat and organized.
We'll just round up your known circle for interogation.

See how this big brother thing works?
You out yourself!
Right after your installed the video cameras around your home and hooked them to the internet.
Now that ALL your purchases are recorded. Your GPS cell phone will record your wereabouts.

You have been warned!

Falco, under the bridge, no one is watching.

As one of the 33-40% (most estimates) of homeowners that have no mortgages, I would look forward to the abandonment of the home mortgage deduction. As for a deterioration of home values, check out real estate prices in Great Britain where mortgage interest deduction was entirely phased out. Want to buy a flat in London?

As one of the 33-40% (most estimates) of homeowners that have no mortgages, I would look forward to the abandonment of the home mortgage deduction.

Good point!

You promised to quit!

Wow, an exclamation point from columbiacounty. Is this a crack in that miserable gray rock facade?

too late! I am dropping out!