Poll: Mortgage tax deduction
The homeowners' mortgage-interest tax deduction is in the news this week because the Obama administration wants to reduce the amount that higher-income Americans can itemize. From The Wall Street Journal:
Households that currently pay income taxes at the 33% and 35% rates would only be able to claim deductions at the 28% rate. That means that for every $1,000 in deductions, a household in the top tax bracket would realize a tax savings of $280, down from the current $350. The proposal wouldn't take effect until 2011.
Supporters say it's a good idea because wealthier folks don't need subsidies to buy houses, while detractors -- including the National Association of Realtors -- say this would hurt the housing market at a time when it can't take more lumps.
I'm curious what you think about the mortgage deduction. Weigh in:
Comments
You might mention that the mortgage deduction is already capped, so that people who buy REALLY big houses with really big mortgages can't deduct all the interest. And it's only for the primary home. So, what is this proposal accomplishing, really?
Posted by: Tim | February 28, 2009 8:24 AM
Thanks for mentioning that, Tim: The limit for fully deducting your interest is $1 million for a mortgage and $100,000 for a home equity loan.
But owners can take the deduction on their primary home and on a second home. (The limit for fully deducting applies to the total of the mortgages on both homes.)
For true wonks, the IRS rules are here: http://www.irs.gov/publications/p936/ar02.html
Posted by: Jamie Smith Hopkins | February 28, 2009 9:53 AM