As a Realtor, I’m in the loop and a part of the massive “call to action” machine that goes into motion anytime local, state or national governments appear to be heading toward regulations or changes in the law deemed harmful to the real estate industry and its consumers. The latest call to action is regarding the recent debt commission recommendation to scrap the mortgage interest deduction enjoyed by those home owners who itemize tax deductions.
The National Association of Realtors is coming out strongly against any change in the mortgage interest deduction (MID). Since I’m not a mindless Realtor drone, I do have opinions that differ from my industry on a number of subjects. On this one I have more questions. First, let’s see what NAR has to say:
“As the leading advocate for housing and home ownership issues, NAR firmly believes that the mortgage interest deduction (MID) is vital to the stability of the American housing market and economy.
The MID must not be targeted for change. NAR is actively engaged on behalf of the nation’s 75 million home owners and 1.1 million Realtors® to ensure that the current deduction is not modified as was recommended in the Deficit Reduction Commission report released today.”
You can read the entire position statement here. I’m disppointed that it contains no actual data, statistics or substantive supporting argument, but instead just general statements saying, basically, this would be a bad idea. Come on NAR. Where’s the beef? In exactly what specific way would the elimination of this tax deduction jeopardize the “stability of the American housing market and economy.”? I mean, that’s a pretty big assertion.
OK, I understand the basic NAR position and mission of trying to keep things in place that are good for home owners. But I am also vaguely aware of the fact that not many people itemize their deductions on a Schedule A in the first place. Most take the standard deduction, making the MID a mute moot point on their particular tax returns. And many people pay no mortgage interest (1/3 of homes are free and clear) or don’t pay enough to deduct. So they are unaffected also. Who does that leave to absorb to feared repercussions?
How many home owners, or prospective home owners would, upon elimination of the MID, throw their hands up in disgust and scream (think George Costanza’s parents…) “That’s it! I’m selling my home and renting for the rest of my life! They’re not going to get away with this“?
Or, “Honey, let’s cancel the home search. If we can’t deduct the mortgage interest, it just doesn’t make sense to give up the pleasures of renting, and moving from home to home every couple of years”?
I dare say I don’t think many, if any, home owners or prospective home owners would forgo all the benefits of home ownership based solely on an ongoing income tax policy. So, who in fact might be affected by the elimination of the mortgage tax deduction and would it in fact ruin the real estate market, home values and the U.S. economy?