During the second half of 2010, there has been talk of proposals to end the mortgage interest deduction, with adversaries stating that its an unfair advantage to homeowners – renters are not given this advantage, and buying a home is a personal choice and the government should not reward people for homeownership. From the homeowner’s perspective, this deduction is wonderful. According to this CNN article opposing continuing the deduction, “homeowners do not decide to buy a house because of the tax break. Research shows that the tax deduction simply rewards behavior — buying a home — that was going to happen anyway. The tax subsidy does encourage the purchase of bigger and more expensive homes; tax dollars are subsidizing McMansions. The American people are getting nothing good for their $200 billion subsidy.”
The National Association of Realtors is encouraging Realtors to speak out and defend the deduction – and if you feel strongly – you can do so via this link. Personally, I can’t honestly say that I don’t enjoy the tax benefits of owning a home but the CNN article does bring up some interesting points. However, in a slow housing market, I’m not sure I think this is the best time for our government to pull the plug on the deduction, as we could see home sales take another dive as a result. Would market recovery be possible if the deduction goes away?