Mortgage Interest Deduction Phaseout?!

Discussion in 'Economics' started by USAtrader, Feb 26, 2009.

  1. That's nuts. Did I hear that correctly? Obama wants to phase out the deduction for high bracket earners?!

    Any idea if they ever did this if it would apply to only new purchases or to anyone who already had a mortgage?

    That's nuts.
  2. Great fucking news. No more inflated home prices in Cali and Florida due to people getting I/O loans and getting a massive tax deduction.
  3. That's .0xx% of mortgages out there (besides, nothing wrong with that strategy for the fiscally responsible, I'll admit that's few though). Most people rely on the NET cost of mortgage to lower their ongoing to cost of the home purchase. This one is truly nuts. That's a real smack in the face of housing. Granted, AMT reduces the benefit in some higher income cases, but nonetheless, this is truly counterproductive.
  4. Arnie


    They should get rid of this for everyone. Why should renters subsidize owners?

    Also, this little rule had a lot to do with the housing crisis. I wish I had a dollar for every house I appraised where the onwner was tapping his equity to buy his new car/boat/vacation/wedding for daughter etc...Some of them were serial re-fier's. They wanted every last nickel. "I need a high appraisal" they'd say. "Fuck you", I'd say. Its the law of unintended consequences. You subsidize debt, don't be surprised when you get more of it. A house is not an ATM, but this little rule made it seem like one.
  5. I agree with basically all you say. However, as it regards renters subsidizing owners. That's fine with me if they want to change it GOING FORWARD. However to retroactively change the rules is very problematic. Do those people who purchased a home taking into account that deduction going forward get a take back? Obama wants to retroactively adjust the cost of their home upward.
  6. Actually I think it's a very wise move. Housing is a consumer item that only returns something once to the economy. If the same money is put into investments there is a continuous return to the economy.

    Why do you think Canada didn't get into such big problems with inflated home prices and excessive consumption. Our mortgages are not tax deductible.

    I'm Canadian myself and I have a mortgage that is tax deductible. However, the money I borrow against my home is being used for investments.
  7. Again, I'm referencing the retroactive aspect of the change. I am not as much at issue with the deduction being lost for NEW mortgages going forward.
  8. harkm


    Wouldn't removal of the tax deduction actually raise rents? Since the CPI uses "owner equivalent rent" as its housing price component shouldn't this raise the CPI?
  9. vikana

    vikana Moderator

    there are already limits on deductions for high-income earners.
  10. Also this would possibly hurt local property taxes and in turn put a greater burden on renters. Got to get them taxes somehow.
    #10     Feb 26, 2009