As the holidays approach, the Obama administration and Congress are in the midst of heated negotiations regarding the impending fiscal cliff. One of the many items on the table for discussion is the mortgage interest deduction, a policy that benefits homeowners but may be in danger of being eliminated.
The mortgage interest deduction incentivizes home ownership by lowering an individual’s tax burden: homeowners can deduct any interest paid on their mortgage, often a significant amount, from their taxable income. Some believe that taking away the deduction would hurt the economy by causing home prices to fall. The Obama administration has been in favor of capping the mortgage interest deduction on high-income households. (Mitt Romney was in favor of capping all itemized tax deductions).
Recently, RealEstate Business Intelligence (RBI) took a look at how many homes sold in the area so far this year would be impacted by a $35,000 mortgage interest deduction cap. See a breakdown (those affected by the cap in red) in the charts below:
Courtesy of RealEstate Business Intelligence
RBI cited this analysis from Econ 70 regarding limiting the deduction:
“If all 1040-Schedule A deductions, including the mortgage interest deduction are capped at about $35,000, then homeowners with houses priced north of $500,000 would be the ones primarily affected, and their homes would fall in value. Interestingly, they might respond by reducing charitable giving. If, however, the deductible amount is limited to 80% of total deductions, then all itemizers would be hurt, and many more houses would decline in price.”
This article originally published at https://dc.urbanturf.com/articles/blog/what_could_the_fiscal_cliff_mean_to_homeowners/6405.
Most Popular... This Week • Last 30 Days • Ever
In this edition of First-Timer Primer, we look into the question of how to determine ... read »
A Roth IRA is one of those accounts that people feel is totally off limits until you ... read »
The now-historic Uptown Theater; the coming plans for the Landmark Mall; and the high... read »
UrbanTurf Listings is a premium property listings service that showcases some of the ... read »
Long-term mortgage rates dropped this week, hitting pause on the steady ascent that t... read »
UrbanTurf has compiled virtual looks at large new developments around the DC region.... read »
Why condo fees are high in some buildings and low in others can be a difficult questi... read »
Virginia's homebuyer assistance programs can seem complex. This edition of First-Time... read »
When sellers haven't quite lined up their next house before their settlement date com... read »
The preferred mortgage product among most home buyers is the fixed-rate mortgage. How... read »
With this weekend's DC houseboat tour a day away, UrbanTurf thought it only fitting t... read »
President Obama travels to Denver this morning to sign the stimulus bill that has bee... read »
In this week's installment of Ask An Agent, a reader wonders if there is a rule for h... read »
As The Wharf prepares to begin construction, DC's houseboat community heads to its ne... read »
In this week's installment of Ask An Agent, a reader asks a fairly common question th... read »
DC Real Estate Guides
Short guides to navigating the DC-area real estate market
We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!
Intro guides for first-time home buyers
Awesome and unusual real estate from across the DC Metro