Some in congress are attempting to brand home ownership as a bad idea. They argue that money saved from the elimination of the mortgage interest deduction (MID) will help reduce the current federal deficit.
Eliminating the deduction is very risky. If such legislation passes, home-ownership - a source of pride for many Americans - will be instantly devalued. The housing markets will likely further destabilize, with home prices expected to drop another 15%. Greater burdens will be placed upon those struggling to hold on to their current homes or those saving for a home.
Politicians proposing to eliminate the deduction claim that "the mortgage interest deduction encourages buyers to be fiscally irresponsible by giving them more purchasing power to buy a more expensive home than they otherwise could afford." As an experienced Realtor, I have never had a single buyer client determine the price of a house based on the interest deduction. Buyers often arrive at a price based on total income, available down payment, interest rate and overall financial goals.
Those that oppose the MID also claim that the deduction only benefits high income people. However, according to the National Association of Realtors, “almost two-thirds [of homeowners] are middle-income earners…, the pillars of our federal income tax revenue.” In addition to hurting these earners, other small businesses serving homeowners will be affected. Through trickle down spending, homeowners spend money on home improvements ranging from porches, patios and fireplaces to furniture, window treatments and paint. All of this spending benefits our economy as a whole rather than just a certain income bracket.
The interest deduction has long been a significant tax benefit to homeowners of all incomes across the nation. Eliminating this benefit at a time when the country is still reeling from a severe recession is not only risky, but it is like kicking a dog when it is already down.
For more information regarding the mortgage interest deduction, see the following article on Realtor.org.
Your Property People, Inc. is a full service real estate brokerage offering residential and commercial services to the greater Charlotte area. We have agents who speciaize in Western Union County including Marvin, Weddington and Waxhaw and the south Charlotte area, including Ballantyne, Piper Glen, and South Park.
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