In an effort to find sources of revenue to avoid the looming “fiscal cliff,” Congress and the White House are deep in debate over limits on a broad array of deductions for taxpayers. One of these is the mortgage interest deduction, a tax break that Realtors® say is vital to the stability of the American housing market and economy.
Specific legislation capping or eliminating the MID has not been proposed, however some have speculated that it could be on the table as public policy makers in Washington look for ways to address the U.S. budget deficit.
The National Association of Realtors® will not speculate on any hypothetical scenarios, but has always been a long-standing supporter of the MID. “Until Congress introduces specific legislation, there’s nothing to say about any proposed changes to the mortgage interest deduction,” said 2013 NAR President Gary Thomas. “We will remain vigilant in opposing any future plan that modifies or excludes the deductibility of mortgage interest.”
If a deal is not reached, many believe a “fiscal cliff” could have severe damages on the economy and may result in another recession. Realtors® believe this could in turn have a significant effect on the recovering housing market.
“The housing market is still healing,” said LJ Lundy, 2012 President of the Silver City Regional Association of Realtors. “We’ve made some progress, but the market is continuing to recover. Another recession could severely impact the growth we’ve experienced to date. The debate over limiting deductions is an important one, but the MID should not be part of it. Too many Americans rely on this crucial tax break.”
The Silver City Regional Association of Realtors points out the MID facilitates homeownership by reducing the carrying costs of owning a home. It also benefits primarily middle- and lower income families. Sixty-five percent of families who claim the MID earn less than $100,000 per year. In addition, American homeowners already pay 80 to 90 percent of U.S. federal income tax, and this share would rise if the MID were eliminated or reduced.
“Changes to this important homeownership benefit would destroy the wealth accumulation of millions of hardworking middle-class families and the dreams they’ve worked hard to achieve such as college, retirement or starting a small business,” said Lundy. “The ability to deduct the interest paid on a mortgage can mean significant savings for many families in this country. Tampering with the MID could tip the economy into another recession resulting in further job losses for the country, and could effectively close the door on the American dream. Realtors® will fight hard to keep that door open for current and future generations of Americans.”