San Diego, CA (PRWEB UK) 24 February 2013
According to Los Angeles Times, the mortgage interest tax deduction may be subject to changes due to the fiscal cliff debate. This prompts a response from The Mortgage Planners’ President, Shanne Sleder.
“This would affect Southern Californians in particular because the homes here cost more, and the deductions would be more sizable than in other parts of the country,” said Mr. Sleder.
“It could hurt demand for housing here if changes to the mortgage interest deduction are large enough that renting becomes more attractive than buying,” he continued.
According to the news article, the deficit commission proposed lowering the limit on mortgage principal eligible for a deduction from $1 million to $500,000. This would remove any deduction for interest on a second home and turn the deduction into a tax credit that is capped at 12% of interest paid.
The tax credit would allow homeowners who do not itemize deductions to deduct the interest amount from the amount of taxes they owe. But the cap would prevent those with large mortgages from getting credit for all of the interest they pay.
Congress' Joint Committee on Taxation found that 78% of the mortgage interest deductions in 2010 went to households making over $100,000 in yearly income. Households with incomes over $200,000 got 35% of the mortgage interest deduction.
“While it’s true that the proposed changes to the mortgage interest deduction would affect wealthier people more since they tend to own more expensive houses, have more interest to deduct, and their income is taxed at a higher rate, the changes would also affect anyone who is buying an expensive home,” said Mr. Sleder.
“However, there is an opposing factor that might mitigate the effect of the changes in mortgage interest deduction. That is, most people see home ownership as something that is much more than a transaction. Sure, the numbers have to make sense, but owning a home symbolizes setting down roots somewhere and making it your own. With interest rates still at a historically low level, home ownership has become more attractive to buyers who are looking to buy something for the long term,” he continued.
Potential homebuyers interested in loan consulting can contact the mortgage experts at The Mortgage Planners.
About The Mortgage Planners
The Mortgage Planners is a full service mortgage lender based in San Diego, California. They have been helping clients with home loans since 2003, and have Mortgage Banking and Mortgage Broker channels available to their clients to help with purchase, refinance, and reverse mortgages. The Mortgage Planners is affiliated with West Coast Mortgage, a local Direct Lender in San Diego for the past 15 years. The benefits of being a direct lender include controlling the loan documents and funding of the loan, more competitive interest rates and fees, and quicker underwriting time periods.
Home buyers needing expert mortgage assistance can contact The Mortgage Planners.