Having a tax deduction for mortgage interest makes owning a home more affordable because the deduction lowers the amount of tax you pay. U.S. Census data shows 37% of home owners with mortgages spend more than 30% of their income for housing. Paying less for housing means having more disposable income for savings and other household expenses.
Increasing housing affordability increases the number of renters who can afford to buy a home of their own responsibly; increasing the number of home buyers helps keep home prices stable for those who already own homes by ensuring a steady stream of new buyers.
How the deduction works
In general, any home owners who pay U.S. taxes and who itemize their taxes can deduct mortgage interest attributable to primary residence and second-home debt totaling $1 million, and interest paid on home equity debt of as much as $100,000.
Mortgage interest deduction threatened
In recent years, the mortgage interest deduction has come under attack. Among the suggestions for cutting it back to deal with the deficit:
* Reduce the mortgage interest deduction for upper-income taxpayers—they’d only receive 28 cents on the dollar, even if they’re in a 33% or 35% tax bracket and can now deduct 33 or 35 cents on the dollar.
* Reduce the $1 million cap by $100,000 a year.
* Change the mortgage interest deduction to a 15% tax credit.
In the past, members of Congress have suggested other mechanisms for eliminating or limiting the mortgage interest deduction. None of those has ever gained traction.
Now is a Great time to Buy, Sell or Invest in Real Estate! Ask me why….
Email me at Regina@ReginaWallace.com or visit my website at www.SearchChicagoHomesForSale.com