Real NEWS | Mortgage Interest Deduction Debate

At first blush—this seemed like a no-brainer to me.  Of course Congress should extend the mortgage interest tax deduction (H.Res.25)—isn’t that one of the great tax benefits of home ownership?  Then I read Donny Shaw’s take on it, which presents some interesting points.  If anything, it made me want to take a closer look.

More on the debate:

“There is no dispute that the deduction benefits higher-income earners more than lower- and middle-income Americans. If you’re in the 35% tax bracket, you get $35 of savings for every $100 of mortgage interest you pay, but if you’re in the 15% tax bracket, you only get $15. So it’s hard to claim that the deduction is targeted at people who are on the fence on the question of buying a home vs. renting.” – Charles Wallace, Daily Finance

“True, everyone from the International Monetary Fund to the Tax Policy Center to the White House fiscal commission have called for the U.S. to cap, redesign or simply get rid of the deduction. The IMF called the mortgage tax break  “expensive and regressive.” But this comes up every few years or so, before everyone realizes it’s impossible to hack away at a cherished part of the tax code.” – Shira Ovide, WSJ Deal Journal

“Public support for retaining the interest deduction is overwhelming. According to a nationwide survey of likely voters in September, nearly 80 percent supported retaining federal tax incentives to promote homeownership, which has been in the tax code since the introduction of federal income taxes in 1913.” – Larry Kush, Las Vegas Sun

At this point, I’m inclined to believe the best answer lies in reforming the deduction, vs. renewing it as-is or doing away with it completely.  We’ll see what happens.

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