Mortgages Blog

Finance Blogs » Mortgages » An end to mortgage deductions?

An end to mortgage deductions?

By Judy Martel · Bankrate.com
Thursday, July 12, 2012
Posted: 8 am ET

With job growth and the economy as central campaign themes, presidential candidate Mitt Romney and President Barack Obama are putting forth very different tax plans. Both could spell doom for some popular breaks, including the mortgage interest deduction.

Romney hasn’t provided all the specifics on his plan, but says it will reduce all individual income tax rates by 20 percent. The top individual rate would drop from 35 percent to 28 percent and the corporate rate from 35 percent to 25 percent, a move he says will unleash economic growth. The Tax Policy Center in Washington released a report yesterday saying the tax reductions will require eliminating some breaks. In 2015, according to the report, Romney would need to ax $320 billion in tax breaks, or 30 percent of the total, to pay for his plan.

Obama's plan includes raising taxes on incomes above $250,000. A bipartisan panel appointed by the president to recommend ways to reduce the national deficit suggested eliminating the mortgage deduction or reducing the limit from $1 million to $500,000.

Currently, individuals typically itemize if their deductions exceed the standard deduction of $5,800 for a single taxpayer, $11,600 for couples filing jointly, or $8,500 for head of household. According to a congressional report by the Joint Committee on Taxation, about half of U.S. households take advantage of the mortgage deduction. With its current limit of $1 million of the mortgage value, it overwhelmingly favors wealthy taxpayers. Most average taxpayers fall within the standard deduction amounts.

The Joint Committee on Taxation also reported that the mortgage deduction cost the U.S. $90 billion in revenue in 2010.

Do you believe that either Obama's or Romney's tax plan will help spur the economy and reduce the national deficit? Are you willing to possibly give up the mortgage deduction in exchange?

Keep up with your wealth and mortgages and follow me on Twitter.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
151 Comments
Paul Thompson
August 03, 2012 at 6:49 pm

Why not start by doing away with all non-needed programs like Acorn, the Energy Dept, Cut the EPA back to where they have to help America instead of hindering growth. Planned Parenthood, Public radio and TV should all be done away with. Cut all government wages back to the private sector level. Cut out all tax payer paid parties for federal workers. stop all foreign hand outs. Send all illegals home. Drill our own oil and stop sending billions to countries that want to wipe us out. Bring all troops back to America and secure our borders. That would be a good start.

dennis
July 23, 2012 at 8:37 pm

So let's remove some or all of the home mortgage deduction when the housing market is falling apart! grade F-

Let's start here government pay avg 100k private pay avg 50k, lets lower gov pay buy 55%. The people that pay them should make more than they do!

Sell all gov building not in use 20%.
Sell all gov aircraft except Air force one. Fly it to Kenya
loaded, pres,wife,kids,grandmother leave the dog they might eat it, Nancy, Reid and the rest of the spending liberal democrats that want or need to go!

If there is still room load the liberal judges and illegals!

Find ten kids who payed their own way through college and let them run the country, they would do better than the 500 plus idiots that run it now.

Put all able people on welfare to guard the boarders, eliminate drugs, gangs, tree hughers, epa, doe, united nations etc.

After all this is done let's see if we still need to raise taxes!

Please save us from us!

So over it
July 20, 2012 at 12:48 pm

When I was married in the early 1980's, the government not only allowed mortgage interest deductions but car loan interest deductions and credit card interest deductions. The latter two were taken away, okay fine I had no problem with this being taken away. But....we never had children so as a double income couple all of our taxes for schools, state and federal have been free to the government. We have always paid our income taxes do not cheat or try to take questionable deductions and have never have tax credits for daycare or children. The only deductions we have left are our donations to non profit (which I provide proof for via receipts and corresponding cancelled checks) and our mortgage interest. I have always been a supporter of the good old USA even when it was not popular (the Vietnam Vets coming home were treated horribly by a majority of our citizens) but to say that we need to pay more in taxes to support political miscreants is repulsive. If every IRS employee, every State or Federal employee and every Politician who has not paid their taxes (yes, these are the people who we support through our taxes) would be fired and forfeit their pensions maybe this would be a more profitable solution. These people do not pay into Social Security. I have always believed that I will never see Social Security due to inept government management. The government needs to STOP wasted spending, STOP supporting countries that are not our allies, STOP spending exaggerated prices for goods to businesses who have the attitude that they can charge exaggerated prices because it is the government and not private corporations. STOP wasting money. Then and only then will I agree that my mortgage interest should be cut. The Fed's have my money without paying me interest on Social Security so why shouldn't I at the minimum be able to deduct my mortgage interest.

Tony
July 19, 2012 at 11:19 pm

Hey Acs 451,
I understand how you feel. However, being involved in church work over the years, many of the Christian Churches today have out reach programs that help the families that need help.
My church in Clermont (Real Life) has a food pantry, takes up special collections for people in need, they have a 2nd Time Around Shop that helps people with clothing, furniture, etc.
We have a Real Help Program that does a home make-over for people who need it.
Now not all churches do that... however, many do.

Tony
July 19, 2012 at 11:13 pm

There's something I never understood.
A person goes out and borrows money (secures a mortgage) to purchase a home. And then the government gives them a tax deduction for their interest? What is that about?
I go out and take a loan out to purchase a car. Do I want the government to pay the interest on that loan too?

I own a home... and I certainly don't want to pay anymore taxes. However, our country needs to raise money to get out of debt. That debt effects us all. Cuts, adjustments, etc. have to be made... including cuts and spending by our government.

We all need to take a hit... and sacrifice a bit to get out of the hole we are in. Instead of pointing fingers and blaming others, I believe we all need to take some responsibility and suck it up.

I believe this is our wake up call ... for our United States. We the people need to remove our entitlement mentality and work for our country.. not just for ourselves.

I remember growing up with:
God, Family, Country and Business. What happened to the "country" in this equation? Actually, what happened to "God" in there. It seems we evolved to Me & Business.

Just sayin'

acs451
July 19, 2012 at 11:03 pm

instead of eliminating mortgage deduction, wouldn't it be easier to eliminate religous group non-profit status, heck they go beyond the bounds of political non affiliation anyway. Act more like a pac. Think how much money would be added to the government vault, to help the poor and under privileged. Balance the budget. who knows what else. oh yeah then it wouldn't matter who called themselves a religion. wouldn't be for the IRS to decide.

Leon Hippolyte
July 19, 2012 at 7:57 pm

Most poor and middleclass families do not qualify for the Itimized deduction. For those who own a house and happen to carry a mortgage, the burden of having to keep up with the payments in today's economy is stressful enough. for most of these mortgage holders, a bit of a relief comes during Tax filing season when they claim the mortgage and property tax deductions which allows then to get a refund. Most, if not all of those hard working Taxpayers use that refund to catch up on the delinquent bills that had to be prioriatized in order to stay current on their mortgage payments. For some it is a chance of bringing the mortgage up to date. In as much as the President attempted to provide help to mortgage holders in having their mortgages restructured for a manageable payment, this effort has not worked in that the Financial Institutions are not cooperatiog on that measure. The White House should create an oversight committe to insure that these measures are enforced, and fine the non complying culprits. Until such a measure is enforced, which will help correct the Housing crisis,the economy will continue to lag.So the idea of trying to heal a cancerous tumor by applying a band aid is bundle of caca. Let's adress the real problem Mr. President, and you too Mr. Romney.

Leon Hippolyte
July 19, 2012 at 7:13 pm

Most poor and middleclass families do not qualify for the Itimized deduction. For those who own a house and happen to carry a mortgage, the burden of having to keep up with the payments in today's economy is stressful enough. for most of these mortgage holders, a bit of a relief comes during Tax filing season when they claim the mortgage and property tax deductions which allows then to get a refund. Most, if not all of those hard working Taxpayers use that refund to catch up on the delinquent bills that had to be prioriatized in order to stay current on their mortgage payments. For some it is a chance of bringing the mortgage up to date. In as much as the President attempted to provide help to mortgage holders in having their mortgages restructured for a manageable payment, this effort has not worked in that the Financial Institutions are not cooperatiog on that measure. The White House should create an oversight committe to insure that these measures are enforced, and fine the non complying culprits. Until such a measure is enforced, which will help correct the Housing crisis,the economy will continue to lag.So the idea of try to heal a cancerous tumor by applying a band aid is bundle of caca. Let's adress the real problem Mr. President, and you too Mr. Romney.

David Myhr
July 19, 2012 at 6:37 pm

If we want to rescue the middle class we should consider reinstating the deduction of all interest on all borrowing as well as eliminating the 7.5% threshold on medical payments, in fact eliminate all minimum thresholds. Also cap interest rates on consumer borrowing at prime plus five percent. This would put money in the pockets of those who most need it and are most likely to spend it thereby stimulating the economy. A couple hundred million people with money to spend will do more to stimulate the economy than all the tax breaks for the wealthy who just keep accumulating wealth and not spending it. It is a national shame that we have 400 people in America that control more wealth than the 150 million of the population. How did we let that happen?

Lori Bitely
July 19, 2012 at 5:56 pm

I agree that the mortgage interest deduction is one of the only sizable deductions my family benefits from. Unfortunately, I have begun talking to my sixteen year old about the 'facts of life'. Not the birds and the bees discussion we had years ago, but the reality that if you don't get scholarships for college, you will do what I did: work hard to make enough to pay your bills, borrow when needed in the form of student loans, so that you can graduate with a marketable job (mine is in healthcare) and make a better living. Now, I can afford my student loan payments and higher taxes! I worked, raised three kids, attending nursing school full-time, stayed up studying late into the morning when my kids were sleeping. Thanks, Obama, for telling people who are willing to work hard and gamble that "you didn't do that".