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Mortgage interest deduction safe

By Kay Bell · Bankrate.com
Thursday, September 23, 2010
Posted: 2 pm ET

Just in case you didn't know it, the mortgage interest tax deduction is safe.

Really? This is news? 

No. But then neither was the headline of a press release on a National Association of Home Builders recent survey. The industry group message showed up in my e-mail inbox proclaiming, "Voters Warn: Don't Mess With the Mortgage Interest Deduction."

Um, I think Congress already knows that. Back in 2005, a special tax reform panel created by President George W. Bush came up with some ways to simplify and make the tax code a bit fairer. The panel's proposals were effectively dead on arrival because the members had the audacity to suggest doing away with the mortgage interest deduction.

The Bush panel didn't want to take away the tax break entirely. They just proposed replacing it with a credit that would benefit more taxpayers. Big fat chance.

Not only was that tax reform report shelved, never to be seen again, Washington, D.C., soon expanded tax breaks for homeowners.

Over the last few years we've gotten private mortgage insurance, or PMI, deductions for some homeowners; residential property taxes that can be claimed by folks who don't itemize; and nontaxable debt forgiveness for some folks who had trouble hanging onto their residences.

And don't forget the first-time homebuyer credit. Its latest version is in effect for one more week.

So what's up with this home builders' survey that informs us that homeowners like the mortgage interest tax break?

The survey's entire premise takes a page from lawyers: Be sure to ask questions to which you already know the answers.

Even better, it was the perfect opportunity to tout an attention-grabbing headline. It worked. I'm giving it attention. So sue me.

Also, the housing trade association's timing is fortuitous on two fronts.

First, the survey comes as already noted when the last bit of Congressional help for the housing industry, the homebuyer credit, is about to finally end. Buyers must close on eligible home purchases by Sept. 30 in order to claim the break on their tax return.

Second, the survey was released just before the midterm election. What better time for the housing industry to make sure that voters and candidates know they're still around -- ready to make their wishes known and keep campaign contributions flowing.

Or as Neil Newhouse, partner at Public Opinion Strategies, which conducted the survey, put it: "Clearly, voters have a very strong connection to the home mortgage interest deduction and are not likely to respond well to efforts to reduce or eliminate it. In fact, voters overwhelmingly say they would be less likely to vote for a candidate for Congress who supported either eliminating or reducing the home mortgage interest deduction."

Thanks, home builders, for the reminder. But you didn't have to go to the trouble.

One thing politicians know quite well is that we Americans love our homes and we love our debt. And Representatives and Senators are very cognizant of the fact that they better not mess with how those two fortuitously come together in the tax code.

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1 Comment
joe
September 28, 2010 at 3:56 pm

I do not love debt one bit. Speak for yourself.