Homeowners' tax deduction in danger?

... Reading the other day the headlines in the San Jose Mercury News: "Coveted tax break in peril?"

With the negotiations going on in Washington to avert the "fiscal cliff", we all know that there will be some combination of cost reduction measures and tax increase, whatever this combination will be.  But the tax deduction for homeowners regarding the interest paid on their loan is definitely in consideration.

For the main parts of the nation, this is not an issue, but for the Bay area, where according to this article, 40% of the purchase loans in the Counties of Santa Clara and San Mateo are for more than $500,000, it is a big deal.  13% of those loans were for more than $800,000, and 10% were for more than $900,000.

One way to find money is to reduce this interest deduction.  If the maximum mortgage cap is brought down from the present $1million to $500,000, over 10 years, it would raise $41.4 billion according to this article, which would look good to reduce the deficit of course. 

What would you do, if in the course of reducing the deficit, the politicians were to take away part of the mortgage deduction?  Most likely, if you own a house in the Bay Area, you have a significant mortgage attached to that house.  Would it affect you?  Would you agree with that?

Francis

Silicon Valley real estate

Current Mortgage rates

Non-profit organization worth noting: Partners for New Generations.

Voters place high value on homeownership !

Voters place high value on homeownership.

By an overwhelming margin, American voters strongly value homeownership and would oppose efforts to weaken or eliminate the mortgage interest deduction or diminish a federal role to help qualified home buyers obtain affordable 30-year mortgages, according to a national survey conducted on behalf of the National Association of Home Builders. The survey gauged voters’ attitudes towards homeownership and housing policy issues.
The poll shows that three out of four voters – both owners and renters -- believe it is appropriate and reasonable for the federal government to provide tax incentives to promote homeownership. This sentiment cuts across regional and party line.

Highlights of the survey include:
Two-thirds of respondents say that the federal government should help home buyers to afford a long-term or 30-year, fixed-rate mortgage.

Nearly 75 percent of voters oppose eliminating the mortgage interest deduction.

Sixty-eight percent would be less likely to vote for a congressional candidate who proposed to abolish the deduction.

Ninety-six percent of homeowners are happy with their decision to own, and 84 percent who are “underwater” expressed the same sentiment.

Job uncertainty and saving for a downpayment and closing costs are the biggest barriers to buying a home.

More info on this article from the National Association of Home Builders.

Thanks for reading !
Francis

Silicon Valley Real Estate

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