Written by: Samantha Guarderas
With the housing recovery in progress, taking away a major tax break could prevent future home buying plans. The mortgage deduction is extremely popular with homeowners, real-estate agents, and homebuilders; however, the government is losing billions in potential tax revenue, which may eliminate the mortgage deduction.
However, the deduction is used to encourage homeownership. Homeownership is considered a vital American value. Why? Simply put, housing drives the economy. This could seriously jeopardize property values, which is why this talk of eliminating the mortgage interest deduction is becoming an extremely controversial
topic. According to CNBC, since World War II, this deduction has been one of the main selling points of homeownership. Now, the driving force to eliminate the mortgage deduction is the argument that it only favors one unit of taxpayers, which are the homeowners.
If this were to be eliminated it would cut consumer spending. CNBC mentions that the greatest results of eliminating or cutting the mortgage deduction would include homes becoming less affordable, lowers demands and prices, lowers home improvement spending and affects homeowners in high tax and high property value states. Tanya Marchiol, TEAM Investors Founder and President, has made some great points. We are developing into a renter nation. First time homeowners used to make up 40% of our buyers but are now down to 31%. If you take this deduction away, the current buyers who are already hesitant in this market will experience more fear, and there will be less money in our economy.
If you have any questions or need help finding a home please contact us. The Eklipse Real Estate team is dedicated to putting our clients first.