There’s been some debate in Washington on what to do about the country’s growing inability to pay its bills. As a means to shrink the budget deficit, the House Ways and Means Committee discussed doing away with the popular mortgage interest deduction.
It’s a pretty popular tax break for homeowners. It allows taxpayers to deduct the amount paid in interest on a home mortgage from their total tax liability, which, depending on the amount of the mortgage, can be a significant help in easing the sting of tax season for many in the upper income brackets.
While the standard deduction is $12,000 for a married couple filing jointly, the higher amount of the mortgage, the greater the overall deduction would increase the margin of benefit on their tax rate. This makes homeownership much more attractive than renting, for which there are no deductions.
Still, Congress isn’t sold on eliminating a popular deduction such as this one, according to Accounting Today.
“Homeownership is an integral part of the American dream, and the Tax Code has long provided a variety of incentives to make it easier for families to buy and own a home,” said Ways and Means Committee Chairman Dave Camp (R-Mich.). “We also know that the real estate industry plays a large role in our economy. So, this is an area that needs careful, thoughtful review.”
No kidding, Dave. I can see wealthy homeowners up in arms over this idea, which could make owning multiple properties and high-end homes in sought-after locations a tough sell come tax time. Heck, our property taxes are already ridiculous in Dallas County.
If we’re going to start trimming deductions, where should Congress start?