Tampa Palms, Westchase, Carrollwood and Tampa Bay Real Estate News From Jeanne Prigitano

Back in November, I posted that the Mortgage Interest Deduction (MID) may be in jeopardy and that it could have a detrimental affect on the housing recovery.  House and Senate committees have begun to hold hearings on the subject and will continue throughout most of the year.  That's why I thought it might be time to repost my thoughts on the topic.  Although some believe it will not impact housing recovery, I believe that we are finally  seeing a turnaround and, since the housing market is still fragile and a full economic recovery is also tied to the housing market, any change to the benefits of homeownership can have a negative impact.

Although I risk losing friends and clients, here goes.  If you agree, please contact your representatives and tell them to stay away from the Mortgage Interest Deduction.

Eliminating or reducing the mortgage interest deduction is one of the items proposed by the fiscal deficit commission. The proposal would put a cap on mortgage interest deductions on a primary residence and totally eliminate it on second homes and equity loans and lines.

So, what will they think of next to hurt the housing market? Although there are many good reasons to purchase a home (www.TampaHouseHunter.com/blog August Post: To Buy Or Not To Buy), the mortgage interest deduction made a home more affordable. A mortgage payment was always financially better than a comparable rent payment because of the interest deduction.

I remember the days (barely) when we could deduct all interest payments (credit card interest, car loans). When that deduction was eliminated, many turned to equity lines as a way to purchase cars. That may not have been the soundest thing to do, especially looking at the current housing market. So what unintended consequences will we invite if the mortgage interest deduction is eliminated? If the mortgage interest deduction is eliminated on second homes, what happens to planning for the future retirement property now or purchasing investment properties? Some of those purchases are helping the housing market currently. That is especially true in Florida where many look to purchase affordable second homes now to become permanent homes upon retirement.

Another thought…If we can’t deduct interest payments than we shouldn’t have to pay taxes on interest earnings. What do you think? Let’s not tamper with the mortgage interest deduction. We need a housing recovery to help the entire economy. We don’t need this now.