U.S. considers mortgage interest deduction change

Gary Thomas, 2013 president of the National Association of Realtors® (NAR), testified yesterday before the U.S. House Ways & Means Committee in support of the mortgage interest deduction many homeowners use when filling out their federal taxes.

The deduction for mortgage interest has been part of the federal income tax code since its inception in 1913. Despite a century of additions, modifications, deletions and overhauls of the tax code, Congress has left the mortgage interest deduction in place.

Current law allows a homeowner to deduct the interest paid yearly on up to $1 million in total acquisition debt for a principal residence and a second, non-rental home. Homeowners may also deduct the interest on up to $100,000 in home equity debt.

“The tax system does not ‘cause’ homeownership. People buy homes to satisfy many social, family and personal goals,” Thomas told the committee. “The tax system facilitates ownership. The tax system supports homeownership by making it more affordable. … Over time, mortgages get paid off, other new homeowners enter the market and family tax circumstances change. Individuals who utilize the mortgage interest deduction in the years right after a home purchase are, over time, likely to switch to the standard deduction.”

Rep. Buchanan supports the mortgage interest deduction and asked numerous questions to presenters, who represented different sectors of the real estate market, including homebuilders, apartment/multi-housing groups and market research groups.

Buchanan also appealed to fellow committee members to keep the mortgage interest deduction. Eliminating the deduction, he told committee members, could cause unnecessary pain to millions of homeowners, notably the 63 percent of Americans who claim the deduction and earn less than $100,000 annually.

“This recession has been brutal on homeowners and job creators throughout my home state,” Buchanan said. “As Congress works to create a simpler and fairer tax code, I urge my colleagues to bear in mind the powerful importance this deduction has on Florida, working families and the economy.”

Source: 2013 Florida Realtors®