Lawmakers Eye That Home Mortgage Deduction To Balance Budget

The Presidential, bi-partisian committee scrutinizing ways to cut our huge budget deficit brought on by the housing market collapse, Wall Street firms going under, and the biggest government bail out in the history of the world, may end the U.S. home mortgage  deduction. It could certainly end the mortgage interest deduction of second home properties.

Some say there is no way the government will mess with the sacrosanct home mortgage deduction. I say: it’s 2010 and anything is possible.

Currently, you can deduct mortgages up to $1,000,000. So Todd Gilliam got this a bit wrong:

“Tens of thousands of Dallas-area residents use the deduction to trim their tax bills, mostly higher-income homeowners and those with relatively big loans, along with roughly one in four taxpayers nationwide.”

The Alternative Minimum Tax also plays a role. And every taxpayer is entitled to deduct their home mortgage, whether they itemize or not.

What is likely to happen: a compromise. And one shot at the mortgage deduction — so get ready to not be able to deduct the mortgage on a second or investment home.