No More Mortgage Interest Deduction?

During former President George W. Bush’s administration, the idea was first floated:  eliminate the mortgage interest deduction.  Supposedly a lot of homeowners take the standardized deduction instead of itemizing their deductions.  The federal government theoretically could collect more in taxes.   Plus by eliminating this and most other deductions (except for a precious few), tax forms would be simplified.

One of the selling points of home ownership is deducting one’s mortgage interest on one’s tax return.  If this deduction is eliminated, will the American Dream of home ownership fall out of favor?  Apparently, because of the Great Recession, home owners being underwater with their mortgages, millions facing foreclosure or having been foreclosed, the luster of home ownership has begun to fade.

And, how does the elimination of the mortgage interest deduction affect individuals with rental properties who do not own their rental properties mortgage free?

What about single home owners without children?  Owning a home is their most significant deduction (if not only one).  Local communities fund public schools by taxing home owners.  How cruel and ironic that single home owners have to pay local taxes to support schools yet these same single home owners may lose their mortgage interest deduction.  Those single home owners are penalized TWICE (taxed at local level but lose their deduction).

In contrast, individuals (whether homeowners or renters) with children get a DOUBLE BENEFIT:  they get to claim their child[ren] on their tax returns and the local community, through taxes, pays for their child[ren]’s education.

As this country deals with this Great Recession and looks for ways to tackle the deficit, the possible elimination of the mortgage interest deduction on the federal tax returns shouldn’t be the only thing on the table.

Have you ever asked yourself – why should parents get to claim their children on their tax returns?  Why get, essentially, a tax credit for procreating?

IMHO, only individuals who ADOPT (so children are not wards of the State) should be able to receive a tax credit.

Returning to the main topic of this post – should the mortgage interest deduction be eliminated?  And, if eliminated within the next five years, how much will it hurt those home owners who purchased a home with a 30 year fixed mortgage expecting to have a deduction on their tax returns for the life of the mortgage?

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