February 8th, 2011 3:13 PM by Joan Rusco
Realtors and Mortgage Brokers alike are digging in their heels over a congressional fight to halt the mortgage interest deduction. What would happen to our housing market if they were to take away that long standing tax incentive to buy a home? Perhaps not much. Consider what's happening elsewhere.
Homeownership actually increased in the U.K. following the elimination of the mortgage interest deduction in 2000. It went from 70% to 72%. Homeownership rates in Canada and Australia are almost identical to U.S. rates and niether country allows the deduction of mortgage interest. Perhaps my industry, the real estate industry and politicians aren't looking at the facts. There may be little correlation between the ability to deduct mortgage interest and homeownership rates. But there's even more to this story.
Those who benefit most from the mortgage interest deduction are the top earners. According to the Tax Policy Center only about 1 in 5 middle class taxpayers would see their income taxes increase if the deduction were taken away. The TPC says it would raise income tax liability on these middle class tax payers only about $215 a year. A majority of Americans don't even take the deduction according to government data. About a third of American taxpayers take the deduction and they are primarily the top 10% of earners. Don't get me wrong here, I'm not one of these "soak the rich" types at all. I'm just saying that if your mortgage interest tax deduction is taken away by Washington it may not be all that bad. It might even strengthen our economy and help pay off some of this massive debt that's accumulated in the last several years.
Now it's your turn. What do you think? This may be something we should be talking about and communicating to our elected representatives. Let's not leave this up to special interests such as the mortgage and real estate lobby.