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First, because there's a crisis, they'll have cover to reduce or eliminate the deduction for second homes and boats. Then, they'll start lowering ceilings on how much homes can be worth to qualify or and how much you can deduct, then little by little, they'll chip away at it till it doesn't exist anymore.
I give it 15 years till it's gone entirely. Betting they start the process this or next year.
I fundamentally disagree with the interest deduction. It incentivizes people to keep debt and not pay off their home. It disproportionately favors homeowners over renters. It's also another factor pushing up and inflating home prices, while median wages have not increased over the last decade. It's better for people to pay lower prices for homes and pay less interest, than get a small return from the government on interest payed.
My main problem with the HMID though is that I don't think the government needs to incentivize or encourage home ownership. Renting is a perfectly viable option for many people. But that goes for everything in the tax code, I don't think the government should use taxes as a means to encourage or discourage certain economic sectors, behaviors, etc" But if I were to propose eliminating the HMID over time, it should include a comparable drop in overall taxes.
I would like to see it phased out over time, so as not to punish those that used it to compute how much house they could afford.
I don't think most people understand the rationale behind mortgage interest expence income deduction. Contrarty to common belief, the government didn't introduce this to encourage home ownership.
It's deducted for the same reason corporates deduct all interest expense from taxable income. The same rule applied to all individuals before the great depression. But the government has started to phase out various interest deductabilities since then.
I won't be surprised if the government phases out mortgage interest as well. But politically it will be suicide. However, a big shock (such as double dip recession) may trigger the phase out.
I fundamentally disagree with the interest deduction. It incentivizes people to keep debt and not pay off their home. It disproportionately favors homeowners over renters. It's also another factor pushing up and inflating home prices, while median wages have not increased over the last decade. It's better for people to pay lower prices for homes and pay less interest, than get a small return from the government on interest payed.
My main problem with the HMID though is that I don't think the government needs to incentivize or encourage home ownership. Renting is a perfectly viable option for many people. But that goes for everything in the tax code, I don't think the government should use taxes as a means to encourage or discourage certain economic sectors, behaviors, etc" But if I were to propose eliminating the HMID over time, it should include a comparable drop in overall taxes.
I would like to see it phased out over time, so as not to punish those that used it to compute how much house they could afford.
I'm conflicted. In general, I am against the tax code favoring certain behaviors over others. I would love it if they did a complete rewrite and eliminated most of these deductions and moved toward a flat tax model.
On the other hand, while the affordability is not really an issue, I have bought my house under a certain set of conditions and rules that were in effect, one of them was the mortgage deduction. Most of the rest have been shot to heck by the market, but if they do the typical political shenanigans and just stop the mortgage deduction without addressing the actual problems with the tax code, it will affect me adversely and cause me to pay more tax while further hurting the housing market, I will be pretty mad.
I don't think most people understand the rationale behind mortgage interest expence income deduction. Contrarty to common belief, the government didn't introduce this to encourage home ownership.
It's deducted for the same reason corporates deduct all interest expense from taxable income. The same rule applied to all individuals before the great depression. But the government has started to phase out various interest deductabilities since then.
I won't be surprised if the government phases out mortgage interest as well. But politically it will be suicide. However, a big shock (such as double dip recession) may trigger the phase out.
It certainly didn't start to encourage homeownership, it was just the only interest deduction left when all of the others were eliminated. But over the years, politically, it's intent has changed. Now it's thrown around as the government helping the average borrower.
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