Is Mortgage-Interest Tax Deduction the Better Way?
One of the more hotly contested contentions in the Better Way program is a tax reform blueprint that impacts the mortgage-interest tax deduction. Proponents of the policy suggest that it will double the standard deduction taxpayers receive, and make the mortgage interest deduction unnecessary. Opponents suggest that it diminishes the value of homeownership.
National Mortgage News reports that the current standard deduction for married couples filing jointly is $12,600 and for single filers it is $6,300. Tax deduction is one of the many financial benefits of homeownership. Supporters of the new policy assert that bigger tax deductions will offset the need to write off mortgage-interest.
Specifically, the Better Way states, “For those taxpayers who continue to itemize deductions, no existing mortgage will be affected by any changes in the tax code. Similarly, no changes will affect re-financings of existing mortgages. But just as importantly, because of the other provisions included in the new tax system, far fewer taxpayers will choose to itemize deductions, with the vast majority of taxpayers finding they are better off by taking advantage of the larger, simpler standard deduction instead”
Jerry Howard, the chief executive of the National Association of Home Builders, stated, “we will oppose any attempt to devalue or reduce the mortgage deduction. We believe the tax code should be used to encourage homeownership.” Lawrence Yun, the chief economist of the National Association of Realtors said, “even a discussion of mortgage interest deduction is counterproductive right now.”
Professional housing organizations view the proposal as an “indirect threat” to the mortgage-interest deduction. Even with the recent partisan shift in Washington, the blueprint is far from becoming an active plan.
Sources: The Fiscal News, National Mortgage News, HousingWire