Mortgage Interest Deduction on Cutting Board (income tax, reduce, expensive, budget)

[cohdane]

Hate to say I told ya so, but....

Mortgage interest tax deduction may be in danger « HousingWire

It's probably going to go "buh bye" gradually, but I expect that by the time my kids buy a house, there will be no mortgage interest deduction whatsoever.

[manderly6]

First, I'll believe it when I see it. Second, that article talks about it maybe being reduced for high income earners. I wonder how many people that would actually impact?

[dolphin40]

IMO, they first need to get rid of it for second homes, lower the value of mortgages that qualify, and then start in on the high-wage earners (my definition: people earning more than $250K single or $500K married). They can't just cut it out all at once or the economy and housing markets will really tank when people have to scramble to pay taxes or refuse to buy expensive homes, especially in high-cost markets. I know it would make me think twice about how much house to buy (and where to live).

[piyf]

Meh, if you need the deduction then you're doing it wrong.

[MikeyKid]

lol - "high income earners"... Gubmint is sure cracking down on that hurting group!

They'll do away with it because they have to and it won't spare anybody.

[chet everett]

...I think that any honest analysis of the likelihood of any such radical change in mortgage interest deductibility would it put it somewhere between "Ron Paul defeats Obama in 2012" and "Barney Frank and Rachel Maddow web in lavish Valentine's Day Ceremony..."


There are some things that just are so unlikely that one cannoth fathom how they would come to pass.

[cohdane]

Just looked back at this and saw a huge "smiley" on the post. Didn't mean to do that. (I don't really think I did.) The screwed housing market is not something I find funny.

As to comments-- they start with one group and gradually expand to all the others. If you try to hit everybody at once, enough people are effected to make the backlash to politically hot. So you hit one group. Then add a little more, a little more, a little more....till finally no one gets any deduction.

I personally don't believe in the deduction, but this is a helluva time to phase it out.

[manderly6]

Originally Posted by cohdane

Just looked back at this and saw a huge "smiley" on the post. Didn't mean to do that. (I don't really think I did.) The screwed housing market is not something I find funny.

As to comments-- they start with one group and gradually expand to all the others. If you try to hit everybody at once, enough people are effected to make the backlash to politically hot. So you hit one group. Then add a little more, a little more, a little more....till finally no one gets any deduction.

I personally don't believe in the deduction, but this is a helluva time to phase it out.

But nothing has actually happened yet. If and when they actually do a cut with one group then that is something to talk about.

[keeshonder]

I am all for it, providing there is extensive overhaul of the income tax system, such as going to something like the Fair Tax. However, under the current system, keep it, it is not the government's money to begin with.

[mortimer]

Originally Posted by chet everett

... so unlikely that one cannoth fathom how they would come to pass.

-- This year. --

The current Federal budget deficit is North of $1 Trillion.

"Discretionary spending" - all of it - is only a few hundred billion.

Something is going to give. The Mortgage Interest Deduction doesn't
have to be completely eliminated. There are lots of possiblities.
-------------------------------------------------------------
- phase-out if your income is over $ xxx ( xxx - to be reduced further in later years )
- phase-out if your interest expense is over $ yyy ( yyy - to be reduced further in later years )
- only allowing zz% of the expense ( zz - to be reduced further in later years )
- insert your own idea here [ ...... ]
-------------------------------------------------------------
It will work the same way the Alt-Min tax works. The threshhold for getting
snagged by the Alt-Min used to be way beyond most people. Now, ( the dollar
amount ) for a lower middle class income is what used to be an upper class income.

Inflation is a great tool in the government's toolchest for invisible taxation.

Social Security is going to be cut.
Medicare and Medicade is going to be cut.
The Defense Budget is going to be cut.
Lots of tax deductions are going away.

They will, at least, pretend that the international Reserve Status of the dollar is going to be preserved.