Homeowners currently are allowed to take an itemized deduction for the interest they pay on their home mortgages. With conventional loans, most of the payments in early years go to pay the interest on the loan with a tiny fraction that goes toward principal. Depending on the individual’s tax bracket, the deduction can result in significant savings in taxes owed and therefore the affordability of a home.
At the time of this writing, the President’s debt commission is proposing changes to limit interest deductibility for mortgage interest and eliminate it for home equity loans. The proposal to limit or eliminate mortgage deductability is nothing new. This idea was considered and dropped during President Reagan’s 1985 tax overhaul and has been brought up from time to time ever since.
The National Association of Realtors has been a vigilant watch dog in helping preserve the ability to keep home ownership affordable. They are issuing a call to action to homeowners and others who believe it’s a good idea to have mortgage interest deductability. Please call your Congessional Representative or Senator today! Read more from the National Association of Realtors on protecting the home interest deduction.
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