The primary agency representing the nation’s home builders is fighting back against government proposals to eliminate or reduce the codified mortgage interest deduction, and has launched SaveMyMortgageInterestDeduction.com to centralize action on the issue.
The site, sponsored by the National Association of Home Builders (NAHB), was put up in response to the President-appointed National Commission on Fiscal Responsibility, which released a document in December of 2010 that included a number of fiscal proposals aimed at reducing the national deficit. The document, entitled “The Moment of Truth”, included a suggestion to reduce the current $1 million cap on mortgage interest deductions to $500,000, and to limit those interest deductions solely to primary residences.
Response from the National Association of Realtors and the NAHB was swift, with both organizations taking issue with the proposal, and pointing out that the mortgage interest deduction plays a major role in the decision to purchase a home. As such, according to the agencies, removing or altering the mortgage interest deduction could be heavily detrimental to an already flagging real estate market.
In addition to being popular with prospective homebuyers and current homeowners, the incentive is apparently important to renters as well. According to the NAHB, a September 2010 poll of 800 likely voters showed that 82 percent of renters stated that they believed it was reasonable for the government to incentivize homeownership. Seventy-nine percent of all those polled said the same. The high ratio of support from renters suggests that even this group sees the deductions as an appropriate benefit of homeownership, despite their current ineligibility. Seventy-nine percent of all those polled supported maintaining the tax deductions, as opposed to eliminating them.
The new NAHB-supported website also outlines the importance of the interest deduction to the middle-class, the traditional drivers of the real estate market. New research from the NAHB’s Economics and Housing Policy Group suggests that the elimination of the popular tax program would disproportionately affect middle-income families—those with incomes between $50,000 and $200,000—who claim over 68 percent of the benefits from the mortgage interest deduction.
For more information on the NAHB’s new initiative, visit their website which allows users to receive news and alerts via email. The site also maintains an account on Twitter and on Facebook.
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