Real Estate

I don't think politicians are likely to reduce mortgage payment tax deductions.

The item attracting intention from the proposals is the mortgage interest deduction. It is proposed that the tax code convert the home mortgage interest deduction into a credit, while lowering the $1 million limit on mortgages eligible for the tax break to an amount closer to average housing prices, with adjustments for geographical differences. The problem is that an average is not really representative of housing mortgages. Two houses very similar in design and features may have two widely different mortgages depending where they are located in an area as the price is strongly determined by location. So one’s person’s home may be under the limit the other will be over and will lose out. New houses cost more than existing homes as a general rule. So the unintended consequences will be a move away from new larger homes to existing homes located in less expensive neighbourhoods. Needless to say, homeowners and home builder associations are against this change. What politician today wants to remove or change one of the most popular tax deductions?

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