Tax Reform– Limitation of Home mortgage Tax Deduction
A committee appointed by President Bush has actually come up with an alarming recommendation. They want to restrict the tax deduction for home loan interest!
Following his re-election, President Bush set up an aggressive agenda where he intended to reform social security and the tax code among other things. Just like many things in the political world, this sounded much easier done than it really was. With social security, political forces have required the President to pull back from personal accounts. With tax reform, a similar political and practical mistake is being made.
The bipartisan tax reform committee appointed by President Bush is making a mess of things. They are proposing the removal of the Alternative Minimum Tax, which is plainly an advantage. Regrettably, they are likewise proposing a limitation on the tax deduction you can consider home mortgage interests.
Although the last suggestions are not yet published, leaks have actually led to the belief the tax reform committee is going to propose the mortgage interest tax reduction be restricted to the percentage of any loan that the Federal Housing Administration would compose. Put another method, you would only have the ability to write-off interest on the first $315,000 of a home loan! On top of this disaster, the committee is proposing to eliminate the deduction for real estate tax.
The execution of the above suggestions would be a financial catastrophe for the United States. The real estate market would suffer exceptionally and the property boom would become a bust. In lots of parts of the nation, a single household home averages well over $315,000. In San Diego, the average expense of a home is in the $600,000 range. To get into such homes, lots of families obtain interest just loans to make ends meet. If they lose half of the interest deduction, default will not be far behind.
As soon as again, we are faced with a scenario where politicians just don’t get it. Our real estate market is exceptionally strong and they want to toss a wrench at the same time. Developers and house owner associations have pledged to combat this “tax reform”. You must too if losing half of your deduction problems you.