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Mortgage Interest Deduction – Will We Still Benefit?

Home ownership is supposed to be the American Dream. When April 15 rolls around, homeowners reassure themselves that their mortgage interest deduction will sweeten the bottom line of their tax returns. The question is:  Will this tax benefit end? With the government looking for more revenue, and mortgage interest being one of the highest dollar tax deductions, a change to the laws may be in our future.

As it Stands

Currently, homeowners are able to deduct interest on loans up to $1.1 million for first and second homes. The opinion is that this deduction is no longer necessary because it benefits mostly the wealthy, who are more likely to have second homes and high dollar mortgage loans.

Recent Proposals

Since 2009, proposed changes to the mortgage interest deduction included allowing deductions for first homes only, and only for loans up to $500,000. In 2011, further ideas included completely eliminating the deduction and instituting a straight tax credit. Others proposed a mortgage interest deduction based as a percentage of adjusted gross income. President Obama’s 2013 federal budget proposes limiting the tax deduction for families with incomes over $250,000.

What it Means to You as a Santa Fe Area Homeowner

Since this is an election year, we can probably not expect to see too many strong opinions from our politicians about changes to mortgage interest deduction. It’s not politically beneficial to rile up voters – most of whom are homeowners – about this issue. Besides taking a toll on our pockets, it may also affect our home values. I’ll do my best to keep you informed.

Please contact me for more information about Santa Fe area real estate.

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