Does the mortgage interest deduction help or hurt homeownership?
After President Donald Trump announced his new tax plan, some experts from the mortgage industry responded that the mortgage interest tax deduction is at risk.
One reasons for this sentiment is the following statement: “People don't buy homes because of the mortgage deduction,” Trump’s Chief Economic Advisor Gary Cohn said.
The National Association of Realtors has been especially vocal in its fight for the mortgage interest deduction.
“This proposal recommends a backdoor elimination of the mortgage interest deduction for all but the top 5% who would still itemize their deductions,” NAR president William Brown said. “When combined with the elimination of the state and local tax deduction, these efforts represent a tax increase on millions of middle-class homeowners.”
Previously, Mnuchin reiterated that the mortgage interest tax deduction will stay put during the Trump administration. But just because the administration isn’t getting rid of the mortgage deduction, it doesn’t mean it can’t be changed.
NAR and other experts fear that by raising the standard deduction, less people will itemize, and the mortgage interest deduction will have less value. This could, in turn, discourage homeownership, according to these experts.
“I think people buy homes because it represents security and a way to build wealth and a sense of stability,” said Laurie Goodman, Urban Institute co-director of the housing finance policy center. “I don't think the mortgage interest deduction plays a large role in that decision.”
Dan Gilbert, Quicken Loans founder and chairman also agreed with Cohn, saying people buy homes because they are excited about the economy, not because of the mortgage interest deduction.
To continue reading click here!