SPRINGFIELD, Mass. (WGGB) — Fixing America’s debt could end up costing you a lot.
Right now, lawmakers are considering taking away a huge annual refund for homeowners — the mortgage-interest tax deduction.
Rick Mayers of Springfield says, over the years, he’s gotten used to the very generous refund.
“I mean it comes out to almost $10,000 a year,” says Mayers. “So you can subtract that.”
But the federal government is buried in debt — $16 trillion to be exact. Which means that offering such generous write offs may no longer be feasible.
“The mortgage-interest deduction is one of the most common deductions and saves people a lot of money,” says Robert Suprenant, the director of Special Tax Services at Moriarty & Primack. “The average savings can run anywhere from $3,000 per year to $10,000-$20,000 per year, depending on how high the mortgage is, how high the interest is, how high the costs are.”
If that were to disappear, Mayers — along with many other homeowners — would have to do a lot more budgeting.
“Yeah, I’d have to come up with the extra money somehow, probably work more house or something,” says Mayers.
There’s also the fear that in a housing market that’s just starting to recover, either reducing or completely eliminating mortgage deductions could stall home sales, once again.
“The effect on the housing market, what would happen to housing prices, the monies lost in the economy, the spending that would be taken out of the economy — if this deduction is lost — the trickle-down effect would just be devastating to the economy,” says Suprenant.
Of course, nothing is set in stone.
Other proposals include capping all tax deductions, or only allowing people people in lower tax brackets to apply for mortgage-interest deductions.
“I mean, everything is up for grabs right now, we’re talking about the people in Washington trying to come up with an agreement on something,” says Suprenant. “All we know is tax rates aren’t going to go down — tax rates are going to go up.”
Accountants are also advising everyone to take whatever income you can into 2012 and pay taxes on it this year — before the tax rate goes up.
More than 31 percent of tax-payers claim a mortgage interest deduction in Massachusetts. That’s one of the highest rates in the nation.
It’s not going anywheres.
Its in the works and has been for a couple of years… As a Realtor, we will be fighting for this deduction to stay for homeowners through our National and local levels. People can;t afford to loose this deduction… Let the government stop spending !!!
The American Dream is evolving into a nightmare. When it becomes more appealing to pay $60/mo. for federally subsidized housing, than paying $1100/mo. for a mortgage; you begin to see the writing on the wall. If there are no incentives to owning a home, then no one will buy one. This move would really be a substantial blow to our economy should it pass. And would certainly increase the number of foreclosures.
I dont get it! Why penalize the people who are doing the right thing and paying their fair share of mortgage payments and making communities better by not having empty houses on the block. Lets look at taking away peoples benefits of getting unneeded welfare, food stamps, and government assistance instead – NOTICE HOW I SAID UNNEEDED! There’s so many people out there that abuse the system and get things like this that are able bodied people who easily could work, but instead they get assistance because they claim they have PTSD, depression, etc! Seeing this first hand I can say this!!! Just pisses me off when people who do the right thing by paying their mortgage and taxes get penalized! Makes no sense!!!
This government makes me sick, the lazier you are the more you get. The harder you work to do the right thing and maintain a home that betters neighborhoods you get penalized. This country is the complete opposite of the country i grew up in and my parents grew up in, i have never seen people be more discouraged to be successful then when Obama took over.
I like your post Matt. Specifically the UNNEEDED part about government assistance. I have no problem with the government helping those who are truly in need. However, I have a major issue with those who are sucking off the system, thereby pushing into more government spending… All the while hurting the rest who pay their way and then some.
You are correct Tinker Bell. I see it everyday in my possession. The only thing I sort of disagree with is the notion that people will not have the incentive to buy or own a home. The reason I disagree is that it is the single best place to invest your money and I do truly believe that there are enough people out their who have pride and will always be patriotic and believe in the American dream.
Dan – you hit the nail on the head ! It has fiercely changed in the last 4 years….!
finally , this only helps the rich !! i personally don’t believe in land ownership. it is a crime against humanity !!! the planet belongs to all of us !!! just like the kid deduction should go away also . your choice to breed . tax dodging thru kids and homes that you just never really own anyway . you rent it . so as long as you pay taxes on a land holding you still rent .