Romney plan to cut mortgage interest deduction could ‘snag’ middle class: Trulia economist

TRD New York /
Oct.October 18, 2012 01:30 PM

While the second presidential debate did not touch specifically on housing, former Massachusetts Governor Mitt Romney did mention capping itemized tax deductions — of which the mortgage deduction is one of the most significant — at $25,000 per household, in his outline of his tax policy. But Jed Kolko, Trulia’s chief economist, writes, in a recent column for Forbes, that this policy would disproportionately hurt the middle class.

The home mortgage interest deduction is, by far, the largest deduction for middle- and lower-income taxpayers who itemize their deductions, Kolko wrote. And, “together, the mortgage interest deduction, real estate taxes and other small housing-related deductions account for the majority of deductions for filers under $200,000,” in annual gross income, Kolko points out.

Not to speak of the fact that eliminating the mortgage interest deduction, which allows taxpayers a deduction for interest paid toward the first $1 million of a first mortgage, would also likely lower housing prices, the column notes.

The bottom line? “Many middle-income filers itemize and deduct more than $25,000, so a cap at that level would snag many in the middle-class. But he noted that “even without the tax deduction, low mortgage rates and years of post-bubble price declines have made buying much cheaper than renting.” [Forbes] –Guelda Voien

Related Articles

Housing and Urban Development Secretary Ben Carson (Credit: Getty Images, iStock)

HUD wants to jumpstart bank lending on low-income homes

Lenders issued the most mortgages in 14 years last quarter (Credit: iStock)

Nonbank lenders could give serious boost to cooling housing market

The number of closed sales fell by more than 14 percent year over year in the third quarter (Credit: iStock)

Low mortgage rates are killing Manhattan’s all-cash buyer

(Credit: iStock)

Despite housing market slowdown, mortgage lenders just had a great second quarter

The Daily Dirt: The dark cloud hanging over buyers

The Daily Dirt: The dark cloud hanging over buyers

Trump proposal would make getting a mortgage harder for homeowners deep in debt

Trump proposal would make getting a mortgage harder for homeowners deep in debt

Amazon CEO Jeff Bezos and Realogy CEO Ryan Schneider (Credit: Getty Images and iStock)

Everything you need to know about Realogy and Amazon’s TurnKey partnership

The trend could reverse as younger people start to enter the real estate market (Credit: iStock)

Almost 40% of homes in the US are