Wednesday, July 13, 2011

Mortgage Tax Deduction in the crosshairs

Don't expect full repeal of the mortgage interest deduction.  But you will have a 1) Phase out over time 2) a repeal on the interest deduction if the mortgage is greater than XXX.
WASHINGTON - Congress should look carefully at the mortgage interest deduction as part of an overhaul of the federal tax code, House Ways and Means Committee Chairman Dave Camp said Wednesday.
Curtailing or eliminating the deduction, which costs the government $93.8 billion in forgone revenue this fiscal year, would help Camp achieve his goal of lowering tax rates. Changes to the deduction would also affect millions of homeowners and the real estate and construction industries.
"It is a very big part of the tax code," Camp, R-Mich., told reporters. "And it's certainly a big part of people's investment decisions, and I think needs to be treated as importantly and carefully as a major provision of long-standing duration in the code should be treated."
He spoke after the first joint tax policy hearing of the Ways and Means Committee and the Senate Finance Committee since 1940. The committees discussed the tax code's treatment of corporate and household debt as they prepare for a broad rewrite of the tax system.
Critics of the mortgage interest deduction say it encourages homeowners to take on excess debt. Camp said he doesn't know how or whether he plans to propose changing the treatment of debt and equity financing.
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  2. Both houses, the senate and congress should look carefully about this tax deduction where every citizen had their final say on decision.

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