OfflineThis isn’t a political article, as some very knowledgeable economists have indicated that the homeowner mortgage interest deduction really doesn’t help that many lower income owners. However, if you really want to hear screaming and gnashing of teeth from the National Association of Realtors and builder groups, just suggest that the deduction be eliminated or reduced.
House Ways and Means Committee Chairman Dave Camp (R-Mich) has unveiled a draft comprehensive tax reform plan. It seeks to broaden the tax base while lowering individual and corporate tax rates. The draft puts a lot of emphasis on changes to tax rules related to housing and home ownership. Mid-term elections are this year, so we’ll probably see no action this year, but 2015 may bring some significant reform efforts.
Actually, this plan doesn’t do away with the mortgage interest deduction, but it does change it. Let’s take a look at some of the changes proposed that will have an effect on homeowners:
• Reduction of the overall principal cap for the mortgage interest deduction would be lowered over a number of years to $500,000.
• The home equity loan interest deduction would be repealed, but loans to improve the property via remodeling would still qualify.
• The deduction for property taxes paid in connection with owner-occupied homes would be repealed.
• All other individual taxpayer deductions for state and local income taxes would be repealed as well.
• Most of the existing itemized deductions would be repealed.
• The charitable gift deduction would be subject to a 2 percent floor of adjusted gross income.
• The standard deduction would be increased to $22,000 for married couples and $11,000 for individuals.
The Ways and Means Committee summary states that these changes would reduce the number of taxpayers who itemize their returns from the current 30% to around 5% of all returns.
Of course, there’s no way to know if any or all of these changes will ever become law. However, should they all be enacted, the question is whether the fundamental view of home ownership will change. Will fewer people consider it advantageous to own a home, and will the more mobile nature of our society mean more renters and fewer owners in the future?
Homeowners Beware After 2014 Elections
Posted on: Wed, 04/09/2014 - 15:17
Homeowners Beware After 2014 Elections
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This is very helpful to be aware of, however I feel certain activities will spike if this is enacted such as:
1) The home equity loan interest deduction would be repealed, but loans to improve the property via remodeling would still qualify.
This specific part would spike remodeling efforts especially if there is a connection to "green living" think double bonus
2)It seeks to broaden the tax base while lowering individual and corporate tax rates.
The vast difference in perks for corporate tax rates versus individual tax would expand in its creation so if/when it is enacted. The business owner will greatly benefit.
My thoughts are will this promote more businesses activity?
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