The Mortgage Interest Deduction has been a part of American Income Tax system since 1913 – so over 100 years of benefiting the American Dream of Home Ownership. It is one of the tax deductions that frequently are placed on the chopping block. What would happen to the average home owner in the local marketplace for this deduction to be eliminated from tax code? Many believe that it would have an immediate and significant impact on home values. It would definitely make home ownership less attractive.
The mortgage interest tax deduction matters! In 2016, the mortgage interest deduction is allowable for up to $1 million for a primary loan and $100,000 for a HELOC (Home Equity Line of Credit). The interest deduction provides the owner the ability to “leverage” the funds attributed to the mortgage. This leverage then increases the affordability for the owner. Consult a tax or financial advisor as to the requirements and to verify qualification.
This is particularly the case in market areas where the cost of housing is expensive relative to the majority of the United States. It is not surprising to learn that in these high cost market areas, the size of the mortgage interest deduction utilized by tax payers is the most. By correlation this means that the areas of the United States that have high housing expenses will be disproportionately impacted by any changes to the tax code related to the mortgage interest tax deduction.
The National Association of Realtors® states its support of the deduction as follows: “Housing is the engine that drives the economy, and to even mention reducing the tax benefits of home ownership could endanger property values. Home prices, particularly in high cost areas, could decline 15 percent if recommendations to convert the mortgage interest deduction to a tax credit are implemented.”
Without the mortgage interest tax deduction it will make home ownership more expensive. Any decrease of the allowable amount will have a substantial impact on the United States economy. There is a saying: “so goes housing, so goes the economy.” Owner occupied homes are key to the strength of the housing market in the United States.
Karen Briscoe and Lizzy Conroy and their team HBC Group at Keller Williams are active and experienced Realtors® in the Northern Virginia, suburban Maryland and Washington, DC market place. They would be delighted to assist whether for home buying or selling. Please contact via the means most convenient for you: www.HBCRealtyGroup.com, 703-734-0192, Homes@HBCRealtyGroup.com