Mortgage Interest Tax Deduction: back on the discussion block with the Deficit Panel!

The deficit panel is reviewing the “mortgage interest deduction”. This deduction saves homeowners $134 BILLION in taxes. By modifying the deduction over time, the government’s plan is to reduce the deficit, accordingly. But what about the homeowner impact??!!

Wall Street Journal News 11/11/10 on this subject:

What implication does this have on the homeowner?

1) The real estate market will further suffer! The financial benefit of owning vs. renting is the interest tax deduction. By eliminating it, or significantly modify it, will cause consumers to continue to rent.

2) Less available consumer dollars for spending. The tax deduction saves $$, thus allowing consumers to spend and GROW the economy: thus creating and maintaining jobs for all of us.

The proponents of the plan say:

1) This deduction favors the upper class.

2) Most people use the standard deduction: why should homeowners be able to itemize, thus allowing for greater deductions than the standard.

3) We will be able to significantly reduce the national deficit.

It is not just the upper class who owns homes. Especially with the pummeled prices in the real estate market, the doors have been opened for all classes to purchase lower priced homes. Homeowners should be “rewarded” from their government for helping the real estate market by purchasing a home. Home purchase increases consumer spending in many areas.

This plan has been discussed since President Bush was in office. It has now resurfaced with this administration.

This is NOT a good way to reduce the deficit. Especially now! The real estate market is suffering enough. This idea will certainly deliver a death blow to the real estate market.