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Local housing specialists join national debate over changes in tax deduction for mortgage holders
The Boston Globe ^ | 11 December 2012 | Jenifer B. McKim

Posted on 12/11/2012 6:52:48 AM PST by Hemingway's Ghost

The generous mortgage-interest tax deduction that homeowners have long enjoyed could be diminished or eliminated as part of efforts to reduce the federal deficit, disproportionately hurting Massachusetts and other regions where real estate is especially costly.

Proposals to change the deduction include limiting it to the 28 percent tax bracket and lower; converting the deduction to a less generous tax credit; reducing the maximum allowed mortgage balance from $1.1 million to $500,000; and eliminating the benefit for second homes and equity loans, according to the Brookings Institution, a Washington, D.C., nonpartisan think tank.

(Excerpt) Read more at boston.com ...


TOPICS: Culture/Society; Government; News/Current Events; Politics/Elections
KEYWORDS: homeowner; mortgage; progressivism
Did anyone here NOT see this coming?
1 posted on 12/11/2012 6:52:57 AM PST by Hemingway's Ghost
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To: Hemingway's Ghost

“The generous mortgage-interest tax deduction..”

I guess that means we’ve been spoiled for too long.


2 posted on 12/11/2012 6:54:40 AM PST by Huskrrrr
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To: Hemingway's Ghost

Talk about killing the American Dream — first push an agenda to convince people that gov’t freebies are better than work, and now make difficult for those few who do work to own a home.

I wonder sometimes what planet liberals originated on, because I am beginning to doubt it was Earth.


3 posted on 12/11/2012 6:55:53 AM PST by txnativegop (Fed up with zealots)
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To: Hemingway's Ghost

This has been coming since they eliminated credit card and other loan interest deductions.


4 posted on 12/11/2012 6:57:40 AM PST by wrench
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To: Hemingway's Ghost
This is what peeves me off most about self-styled progressives or liberals, especially here in my home state of Massachusetts:

- They buy into the class warfare argument lock, stock, and barrel, and sign onto the notion of tax increases ONLY because they're punitive on a certain class of people they feel deserves to be punished.

- Which gives the powers that be the leverage they need to stick the knife in everyone's back.

5 posted on 12/11/2012 6:57:40 AM PST by Hemingway's Ghost (Spirit of '75)
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To: txnativegop
Talk about killing the American Dream — first push an agenda to convince people that gov’t freebies are better than work, and now make difficult for those few who do work to own a home.

And what, now, is so different than it was a decade ago when the leftists wanted to push for home ownership so bad that they, oh, I don't know, blew up the whole American economy over it?

6 posted on 12/11/2012 6:59:45 AM PST by Hemingway's Ghost (Spirit of '75)
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To: Hemingway's Ghost

Political opportunism taken to radical extremes.

Rahm Emmanuel — “Never let a crisis go to waste.”


7 posted on 12/11/2012 7:03:15 AM PST by txnativegop (Fed up with zealots)
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To: Hemingway's Ghost
Make no mistake, too, that this is also a wedge issue between the suburban/rural voter, where home ownership prevails, and the urban voter, where renters prevail. Renters definitely see mortgage deductions as an unfair give-away to the home owning class.

This, ladies and gents, is not accidental.

8 posted on 12/11/2012 7:04:31 AM PST by Hemingway's Ghost (Spirit of '75)
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To: Huskrrrr
The government givith and taketh away!

Long live government tyranny!(/not)

9 posted on 12/11/2012 7:09:47 AM PST by zerosix (Native sunflower)
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To: txnativegop
This is just out-and-out class warfare:

Mark Muro, policy director of Brookings’ Metropolitan Policy Program, said changes to the century-old tax break are probably on the way — either as part of ongoing talks in Washington, D.C., between congressional leaders and President Obama to avoid the so-called fiscal cliff, or sometime next year.

“This is moving rapidly from the unthinkable to the inevitable,” Muro said.

But he does not believe it will have a devastating effect on most homeowners. The costs of minimizing or dropping the deduction, he said, “are largely going to be borne by those who can afford it.”

10 posted on 12/11/2012 7:12:55 AM PST by Hemingway's Ghost (Spirit of '75)
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To: Huskrrrr

Another entitlement cut.


11 posted on 12/11/2012 7:24:47 AM PST by Wolfie
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To: Hemingway's Ghost

I was explaining to my grandson why owning a home was better than renting. Well, somehow the benefits of home ownership are dwindling—negative equity being at the top of the list and now losing the mortgage interest deduction. Hummmmm take away the proterty taxes, mortgage insurance, home insurance, upkeep expenditures and compare it to the low rentals in areas close to me, I’m seriously beginning to wonder why the heck I’m doing this!!!


12 posted on 12/11/2012 7:26:52 AM PST by myrabach
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To: Hemingway's Ghost

Well, yeah... you may have to pay more in taxes, but look at all the benefits...


13 posted on 12/11/2012 7:28:30 AM PST by Mashood
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To: myrabach
Hummmmm take away the proterty taxes, mortgage insurance, home insurance, upkeep expenditures and compare it to the low rentals in areas close to me, I’m seriously beginning to wonder why the heck I’m doing this!

Our only saving grace, as conservatives, is that the Democrats are trying to pork those who voted for them every which way 'til Sunday. A smart GOP (ha ha ha ha ha!) would trumpet this from the hilltops, showing how the Democrats are really raising taxes on the middle class when they swore they were only hitting the fat cats . . .

14 posted on 12/11/2012 7:30:19 AM PST by Hemingway's Ghost (Spirit of '75)
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To: wrench
This has been coming since they eliminated credit card and other loan interest deductions.

I'm thinking eliminating credit card interest deductions was probably a good thing, as it may have tended to encourage credit card usage. But the mortgage deduction is another matter.
15 posted on 12/11/2012 7:32:25 AM PST by rightwingintelligentsia (Be careful of believing something just because you want it to be true.)
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To: txnativegop
Talk about killing the American Dream

This won't kill the American dream, it will just change how prices are set on houses.

Tax policy should not be used to encourage or discourage behavior, it should be used to raise revenue. Any change to tax policy that removes behavioral incentives is a good thing. There should be more of it.

16 posted on 12/11/2012 7:43:08 AM PST by ArGee (Reality - what a concept.)
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To: Hemingway's Ghost

A perfect example of how people are against “spreading the wealth” until it is their cow that is getting gored.

The home mortgage deduction is a transfer of money from people that do not have a mortgage to people who do have a mortgage.

It’s a form of spreading the wealth around—period.


17 posted on 12/11/2012 7:48:06 AM PST by Brookhaven (theconservativehand.com - alt2p.com)
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To: myrabach
...take away the property taxes, mortgage insurance, home insurance, upkeep expenditures and compare it to the low rentals in areas close to me, I’m seriously beginning to wonder why the heck I’m doing this

I used to be a homeowner. I used to be married, before my then-wife chose to leave me. Home ownership and marriage went together like a horse and carriage. When the marriage fell apart, I stopped owning a house. I've been living in rental housing ever since. That didn't save me from the housing crash -- I had to move out suddenly when my landlord was foreclosed on. But at least I didn't lose equity.

I have single friends who own their own homes and condos...and so I end up helping out on the weekends with maintenance and such. A couple of weeks ago, I was shoveling sand into bags because of a pending flood rain.

As a long-time renter, I understand why there is the home mortgage deduction, and I benefited from that deduction by paying lower rent. That's the point that some renters miss.

Those low rentals stem from the deductions you state: property tax, mortgage insurance, home insurance, and upkeep. Take those away and you will see rents jump.

18 posted on 12/11/2012 7:50:19 AM PST by asinclair (B*llshit is a renewable resource.)
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To: wrench

I think they ought to eliminate the local and state tax deductions as well. It would hit the blue staters the hardest.


19 posted on 12/11/2012 7:52:27 AM PST by technically right
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To: ArGee
That's exactly correct. Those tax deductions merely help the housing industry. One industry shouldn't be favored over another in this economy.

Secondly, but most importantly, such a deduction shouldn't be the determining factor when purchasing a house. If you need such a deduction to afford the house, then the house costs too much.

20 posted on 12/11/2012 8:03:40 AM PST by Theoria (Romney is a Pyrrhic victory.)
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To: Hemingway's Ghost
And what, now, is so different than it was a decade ago when the leftists wanted to push for home ownership so bad that they, oh, I don't know, blew up the whole American economy over it?

Because it was not then about home ownership as it is now not about "fairness".

It is about control of the population through one of the prime vehicles - redistribution of wealth.

21 posted on 12/11/2012 8:21:34 AM PST by NativeSon ( Grease the floor with Crisco when I dance the Disco)
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To: Brookhaven

Limiting mortgage deductions would encourage more owners to pay off their principal to reduce their total interest. This is not a bad idea anyway, but this choice would affect consumption and have unpredictable effects across the economy.

It would also cut down on the purchase of second-residences, bad news for those who own the properties someone might buy for that purpose.


22 posted on 12/11/2012 8:24:34 AM PST by Tax-chick (Stand in the corner and scream with me!)
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To: Theoria

“Secondly, but most importantly, such a deduction shouldn’t be the determining factor when purchasing a house. If you need such a deduction to afford the house, then the house costs too much.”

Let’s assume a “worst-case scenario” — in this case, that the deduction for mortgage interest is eliminated in its entirety.

How will this impact the housing market?
I sense home prices will be forced downward, but by how much?
Will it affect interest rates for mortgages?


23 posted on 12/11/2012 9:01:39 AM PST by Road Glide
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To: Theoria
Secondly, but most importantly, such a deduction shouldn't be the determining factor when purchasing a house. If you need such a deduction to afford the house, then the house costs too much.

Sound advice, we just gave the same advice to our kid who's buying his first house. Other advice was to make sure the payment wasn't more than 1/4 of his income (not counting his wife's income.) Those were the old "rules" and they served us well. Today though rates are so ridiculously low and house prices so depressed, that his payment is about what ours was when we bought a house 25 years ago...but his salary is at least twice of what my husband's was when we bought our first. Who'd have "thunk" it.

24 posted on 12/11/2012 9:07:57 AM PST by memyselfandi59
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To: Road Glide
How will this impact the housing market?

Well, it might mean that average housing will become more affordable for those with average incomes, which would be a good thing.

25 posted on 12/11/2012 9:15:00 AM PST by Notary Sojac (Only liberals believe that people can be made virtuous via legislative enactment.)
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To: Road Glide
'How will this impact the housing market?
I sense home prices will be forced downward, but by how much?
Will it affect interest rates for mortgages? '

Those are good questions that I have no answer for. There are various elements affecting housing. But, I still 'think' prices are still overvalued. Unfortunately, the main indicator on housing prices won't be the deduction, but the Joe Biden three letter word: Jobs.

26 posted on 12/11/2012 9:16:26 AM PST by Theoria (Romney is a Pyrrhic victory.)
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To: Hemingway's Ghost

No big time false collateralized MBSs, so it’s time to rein in the brainwashing of “mortgage deduction” = ownership.


27 posted on 12/11/2012 9:17:22 AM PST by Varsity Flight (Extortion-Care is the Government Work-Camp: Arbeitsziehungslager)
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To: Hemingway's Ghost
A house is not an investment it is a bleeping expense...

* Get Rid of Fanny and Freddie and the CRDA.
* Get rid of the 250k & 500k deduction and make it equal to 15% Cap-Gains rules for your house and also change it so you can take a loss.
* Get rid of Dodd-Frank, Sarb-Ox etc etc and start over...
* You want to get rid of the Mortgage Deduction? Good trade it for 100% Deductibility of Health Care Insurance for the Individual and can Obamacare...

I am so sick of being fed a bill of goods about my home, nice place to live yes, but stop BS-in' me, about what it isn't and sticking it in the tax code to boot...

28 posted on 12/11/2012 9:24:13 AM PST by taildragger (( Tighten the 5 point harness and brace for Impact Freepers, ya know it's coming..... ))
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To: Tax-chick

But, is it right to give a tax benefit to one group (a government subsidy), while not giving it to another?

Obama gives tax benefits to “green companies,” but not to regular companies.

Big corn gets big tax benefits to produce ethanol.

Volt buyers get tax benefits buyers of other cars don’t get.

Renters don’t get a tax benefit to help them pay the cost of their housing.

From a pure math perspective, the HMD has the effect of increasing home prices (because buyers feel they can afford more home because of the tax benefit). But, who really benefits from higher home prices? Agents (who work on commisions) and banks (who make larger home loans).

Without the HMD, the price of homes would not be as high, and thus the loans to purchase them would not be as big.

My main point was though, that we get all exercised about government tax breaks/subsidies for others, we shouldn’t be crying foul when our sacred-cow tax-breaks are targeted.


29 posted on 12/11/2012 9:27:42 AM PST by Brookhaven (theconservativehand.com - alt2p.com)
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To: memyselfandi59
Today though rates are so ridiculously low and house prices so depressed, that his payment is about what ours was when we bought a house 25 years ago...but his salary is at least twice of what my husband's was when we bought our first.

Yes, but you also have to consider that money today is a lot less valuable than it was when you and your husband bought your first house.

30 posted on 12/11/2012 9:33:12 AM PST by Hemingway's Ghost (Spirit of '75)
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To: Brookhaven
is it right to give a tax benefit to one group (a government subsidy), while not giving it to another

I take issue with your term "a government subsidy." It is our money until they get it, not all theirs and a little of it might get "given" back to us.

However, aside from that, I agree with you. I don't think tax policy should be used to control, manipulate, reward, or punish particular subgroups.

My point was simply that, if there's a change in the current regulations, the results will be economically interesting, and certainly "Unexpected!" to many of those who originally thought it was a good idea.

31 posted on 12/11/2012 9:34:52 AM PST by Tax-chick (Stand in the corner and scream with me!)
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To: Tax-chick

From a political stand point, this seems to be the federal version of “we’ll have to cut police and teachers.”

Every time there is a suggestion that spending needs to be reduced at the state/local level, the threat of cutting police and teachers is thrown out to scare people.

Now, the GOP is talking about closing loopholes to increase revenue instead of raising taxes, and someone is floating eliminating the HMD? Just a scare tactic.


32 posted on 12/11/2012 9:44:16 AM PST by Brookhaven (theconservativehand.com - alt2p.com)
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