Ever since the Federal tax code was amended to allow home owners to deduct the interest they pay on their home mortgages there has been talk about repealing it. The deduction was intended to be a temporary measure but, as with many things, it has become an institution, a sacred cow so to speak.
Over the last two years that has been increasing talk about repealing or altering the tax to the point that the National Association of REALTORS has even published articles about it. Talk of the repeal has remained pretty under wraps but during a recent Presidential Debate, candidate Mitt Romney alluded to the deduction in a discussion about his tax plan. Gov. Romney mentioned that his tax plan would allow people to take up to $25,000 in tax deductions each year. Tax payers could choose from a laundry list of possible deductions and mortgage interest was mentioned as part of that list. The inference was that the deduction would remain but is that really true?
If you are fortunate, or unfortunate, to have in excess of $25,000 of tax deductions each year, under Gov. Romney’s plan you would have to forego some of your deductions, which could include some or all of your mortgage interest. If you are one of those who purchased an expensive home and your mortgage interest is more than $25,000 per year, you would lose a portion of your deduction.
I am not naive enough to believe that anyone who purchases a home has the interest deduction as one of their top three reasons to purchase. However, I can remember the purchase of my first home, and that deduction did help get us over the hump for the first few years of ownership. To this day I take the deduction to help reduce my tax bill each April 15th.
I am not going to presume to suggest who to vote for, but I do recommend you do you homework and ask each candidate their views on the deduction. If, like many of us, that deduction helps you at tax time, you might want to know the answer.