Posted by Charles_Ca on 2/27/09 12:20pm
Msg #278926

President proposes to reduce the mortgage interest deduction

in his new budget. Will that have any effect on your business?

Reply by Lee/AR on 2/27/09 12:57pm
Msg #278938

I doubt it. Sadly, most people aren't thinking very far ahead and this isn't something that's going to be in their face until tax time. Unless, of course, it gets an enormous amount of press--which I also doubt. Soooo, not only are the upstanding payers of their bills paying for their mortgage and their neighbors' and contributing tax money for <whatever>, they're also trying to do it with less money. What a concept!

Reply by Charles_Ca on 2/27/09 1:09pm
Msg #278941

Maybe not in your neck of the woods :) but in California...

the mortgage interest deduction is one of the selling points for owning one's home since it reduces the tax burden quite a bit. The President is playing a shell game with the taxes and spending. Increasing the tax burden on those earning over $250,000, on top of reducing the mortgage interest deducton is also going to hurt California more than people realize since there this is a double attack, increasing the tax burden directly and then reducing interest deducions. I think that at least in California it is going to have a chilling effect on the earnings of those involved in residential real estate.

Reply by Gary_CA on 2/27/09 3:55pm
Msg #278965

Would be devistating

especially if applied to everyone (under $250,000)

I think it will also get him a not so pleasant introduction to the power of NAR/CAR lobbying.

Reply by Kevin/Ct on 2/27/09 1:28pm
Msg #278945

Is the reduction for everyone, or just those earning over $250,000.00?

Reply by janCA on 2/27/09 1:52pm
Msg #278947

Earnings of $250,000 plus. n/m

Reply by JanetK_CA on 2/27/09 5:36pm
Msg #278979

How much of a deduction is he proposing?

If it were eliminated all together, that would definitely hurt nearly all homeowners. As to whether or not it hurts our businesses, well I think it depends on how deep the reduction would be. If the impact turned out to be people wanting to amortize over longer periods of time (if that were even an option...), I suppose it might even help. But that's just wild speculation - and probably unlikely.

Reply by Todd/OH on 2/27/09 7:59pm
Msg #278990

Re: How much of a deduction is he proposing?

I don't see this as an immediate issue and it shouldn't hurt business right now. Most of us own a home for investment - the value does appreciate - the tax benefit of interest deduction is merely a plus. I can't see the "average Joe" walking away from a home purchase just because the tax benefit of mortgage interest deduction has been reduced. I would much rather own than rent.

Reply by JanetK_CA on 2/27/09 8:09pm
Msg #278992

Seems issue is whether it will discourage future purchases n/m

Reply by Susan Fischer on 2/28/09 10:10pm
Msg #279118

"the "average Joe" doesn't earn over $250K. I don't give

a rip about the rich. Single-home buyers are not motivated to buy a house to deduct the interest in the first place.

The deductions of second, third, fourth, fifth, sixth, ad infinitim (sp?) mortage interest shouldn't be allowed in the first place. Call it a 'luxury tax' or whatever, the rich can just pay their fair share. JMHO.

My area is full of ever-increasing vacation homes. Many are turning them into vacation rentals for income. Deducting the interest might encourage this, and the practice may help the local economic picture, but on the other hand, vacation rentals in our residential areas are becoming a problem with increased fire/police/medical resources usage, plus other quality of living issues are becoming rampant.

These issues are complicated, but bottom line, leveling the playing field for necessary national expenditures benefits all of us in the long term.

Reply by PAW on 2/27/09 8:23pm
Msg #278993

Reduced deduction for people in the highest tax brakets

The tax increases would ... [reduce] the value of such longstanding deductions as mortgage interest ... for people in the highest tax brackets. Households paying income taxes at the 33% and 35% rates can currently claim deductions at those rates. Under the Obama proposal, they could deduct only 28% of the value of those payments.

From the WSJ: $318 Billion Tax Hit Proposed
http://online.wsj.com/article/SB123559630127675581.html

The mortgage interest deduction is capped to $1 million in mortgage debt.

Won't affect 95% of mortgage holders (so the administration says).

Reply by Carole Breckbill on 2/28/09 8:17am
Msg #279043

Re: Reduced deduction for people in the highest tax brakets

Thanks PAW for again injecting facts into the string. The current administration seems to be focusing on building up the middle class, so I doubt the deduction cap would affect too many beyond the top 5%. As an aside, activity seems to be up this month. Let's hope it continues.

Reply by WDMD on 2/28/09 9:54am
Msg #279063

Re: Reduced deduction for people in the highest tax brakets

Just use this handy program to figure out if it will affect you.

http://thepeoplescube.com/images/TurboShare_200.gif