Home mortgage interest deduction is at risk?

[Anonymous]

Getting rid of that is a poorly veiled middle class tax increase. But raising taxes for the wealthy is still off the table? Total BS.

http://www.washingtonpost.com/politics/obama-gop-leaders-said-to-discuss-new-debt-plan/2011/07/21/gIQAT81BSI_story.html

[Anonymous]

It seems like a straw man. My guess is that Obama told them if they can find "tax reform" that nets $1 trillion dollars, then he's OK with laying off a tax increase.

But of course the only way to do that is to include tax deductions that will never, ever pass. They have to let the GOP put this up to learn their lesson.

There would be no way to repeal this (even though I think it is the right thing to do) because the deduction is baked into homeowners' long term planning.

[Anonymous]

The way to do it is to phase it out over certain levels of mortgages, which arguably isn't "fair" to people who live in high housing cost areas. The other way to do it is just to limit the amount of deductions high income taxpayers can take.

[Anonymous]

Anonymous wrote:The way to do it is to phase it out over certain levels of mortgages, which arguably isn't "fair" to people who live in high housing cost areas. The other way to do it is just to limit the amount of deductions high income taxpayers can take.

Isn't that pretty much what AMT does already?

[Anonymous]

Anonymous wrote:

Anonymous wrote:The way to do it is to phase it out over certain levels of mortgages, which arguably isn't "fair" to people who live in high housing cost areas. The other way to do it is just to limit the amount of deductions high income taxpayers can take.

Isn't that pretty much what AMT does already?

OMG I hate the AMT! Let them tax me fairly and I won't complain. I hate doing my taxes the "regular" way only be told in the end that "sorry, you owe the AMT". If they really want to lower the income level for certain tax brackets, fine, just stop this BS already.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The way to do it is to phase it out over certain levels of mortgages, which arguably isn't "fair" to people who live in high housing cost areas. The other way to do it is just to limit the amount of deductions high income taxpayers can take.

Isn't that pretty much what AMT does already?

Hate the AMT - I think there's got to be a better way.

[Anonymous]

Why is getting rid of the mortgage interest deduction only going to hurt the middle class? I for one think it's a great idea. It doesn't make sense as a policy matter (to me) for the government to encourage home ownership. Didn't we learn that in the housing crisis? Home ownership has its own rewards without the mortgage interest deduction.

[Anonymous]

Anonymous wrote:Why is getting rid of the mortgage interest deduction only going to hurt the middle class? I for one think it's a great idea. It doesn't make sense as a policy matter (to me) for the government to encourage home ownership. Didn't we learn that in the housing crisis? Home ownership has its own rewards without the mortgage interest deduction.

But if you don't own a home, you cannot vote. Well, that is what some people on this board is advocating anyway. And for most people, the removal of the mortgage deduction prevents affordable housing. So, it is back to only the rich get to have a say or vote in this um cough, cough democracy.

[Anonymous]

Isn't paying the AMT the optional? We always do both and pay the one that's lower.

[Anonymous]

Anonymous wrote:Why is getting rid of the mortgage interest deduction only going to hurt the middle class? I for one think it's a great idea. It doesn't make sense as a policy matter (to me) for the government to encourage home ownership. Didn't we learn that in the housing crisis? Home ownership has its own rewards without the mortgage interest deduction.

Also, in the long term, it won't as the housing market will do a painful reset to take into account that people can't buy at a certain price due to the lack of deduction. In the short term, it will be painful, because many people have this deduction baked into their budgets for taxes etc. and made decisions on how much house they could afford (or whether to buy a house) based on these calculations. I think it needs to go, but it should be phased out - so, perhaps, people purchasing after the exemption sunsets won't get it, but people who already own a home will be grandfathered and keep the deduction as long as they own the home. Further, people above a certain income (myself included) should also be able to only take advantage of a portion of the deduction depending on income (including capital gains income as long as hedge fund managers and other high-flying types collect no salary but collect millions in "fees" and so have no income to declare.

[Anonymous]

If the "master plan" is to have something like $3T in spending cuts (real spending cuts) and $1T in new revenues over the next decade, then I think eliminating the entire home mortgage interest deduction is not needed. Certainly that would not be the only loophole closed, and the deduction by itself is something like $1T or $1.5T over a decade.

So hopefully, if they touch it at all, they will simply scale it back to say $700K instead of the current $1M.

[Anonymous]

Anonymous wrote:Why is getting rid of the mortgage interest deduction only going to hurt the middle class? I for one think it's a great idea. It doesn't make sense as a policy matter (to me) for the government to encourage home ownership. Didn't we learn that in the housing crisis? Home ownership has its own rewards without the mortgage interest deduction.

I agree as a matter of policy but disagree as a homeowner in the DC region.

[Anonymous]

Anonymous wrote:Isn't paying the AMT the optional? We always do both and pay the one that's lower.

I thought it was the reverse, that if your calculated tax falls below the AMT, then you pay the AMT, meaning that you pay the HIGHER of the two. But if that's the case, how do some corporations end up paying no tax?

[Anonymous]

I have long felt taxes should be indexed by zip code. They can index everything else - gas prices, Consumer Price Index.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why is getting rid of the mortgage interest deduction only going to hurt the middle class? I for one think it's a great idea. It doesn't make sense as a policy matter (to me) for the government to encourage home ownership. Didn't we learn that in the housing crisis? Home ownership has its own rewards without the mortgage interest deduction.

But if you don't own a home, you cannot vote. Well, that is what some people on this board is advocating anyway. And for most people, the removal of the mortgage deduction prevents affordable housing. So, it is back to only the rich get to have a say or vote in this um cough, cough democracy.

AM going to completely ignore the no ownership, no vote thing bc that is never going to happen, so it's a bad argument for keeping the mortgage interest deduction. And I'd love to see proof that removal of the mortgage interest deduction prevents affordable housing. It makes home OWNERSHIP more expensive but there's also something called RENTING. Which makes sense for a lot of people and is way less risky than owning.

Agree with PP that the deduction should be phased out over time and perhaps grandfathered given how many people count on the deduction to make their budget.