As tax reform efforts return to the fore, multiple sources are saying that the mortgage interest deduction is on the chopping block.
In short, the deduction allows for 100 percent of the interest that you pay on your home loan in a given year to be tax deductible. POLITICO reports that, despite assurances that the deduction would be protected, the Trump administration is looking to lower the current $1 million debt cap.
As currently employed, the mortgage interest deduction is seen by many, regardless of political affiliation, as primarily benefiting the real estate industry, wealthy taxpayers and homeowners in expensive areas. Trump’s promises to leave the deduction untouched were key in his gaining the support of the National Association of Realtors (NAR) last year.
“[L]imiting the mortgage interest deduction amounts to a de facto tax increase on current or future homeowners while putting homeownership further out of reach for prospective buyers,” NAR President William Brown said in a statement. “We would have strong objections over any effort to further cap or limit the deductibility of mortgage interest.”
Many involved in the negotiation process are seeking to pair a reduction of the mortgage interest deduction with a doubling of the individual standard deduction. “By some estimates, doubling the standard deduction could lower by 90 percent the use of the mortgage interest deduction by middle-class Americans, eroding much of the argument for keeping it,” the article notes.
While nothing is set in stone yet, this month will be key for Republicans to craft a plan that will be politically viable, cut taxes for businesses and individuals while minimizing the impact on the budget deficit.
This article originally published at https://dc.urbanturf.com/articles/blog/mortgage_interest_deduction_may_take_hit_during_tax_reform/12880.
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