The once sacred mortgage interest tax deduction could be vulnerable as negotiations regarding the fast-approaching fiscal cliff continue, the New York Times reported. For many buyers, the federal tax break that allows homeowners to write off mortgage payments is a major factor in real estate purchase decisions.
But both Democrats and Republicans, including President Barack Obama and Gov. Mitt Romney, favored capping deductions as a means to ease the federal government’s budget woes, making the deduction particularly vulnerable. Gary Thomas, president of the National Association of Realtors, reiterated the trade group’s support for the deduction but remained tight-lipped in the absence of a specific proposal.
“Until Congress introduces specific legislation, there’s nothing to say about any proposed changes to the mortgage interest deduction,” he said in an email to the Times. “However, it has always been the NAR’s position that the mortgage interest deduction is vital to the stability of the American housing market and economy, and we will remain vigilant in opposing any future plan that modifies or excludes the deductibility of mortgage interest.”
If Obama and Congress reach an agreement regarding the deficit before the end-of-year deadline, legislators would hash out details in the following months, including the mortgage interest tax deduction.
CNBC reported earlier this month that among the propositions on the table were capping the deduction at $500,000; capping it at $250,000; limiting the use of the deduction for taxpayers earning over $250,000; or eliminating it entirely. [NYT] – Hayley Kaplan