The following dialog is excerpted from a chat page that I participate in conducted by my fellow High School graduates. We grapple with many important issues.
"I'm curious about what people here think about the mortgage tax deduction, and whether it should be retained, scrapped or adjusted."
Craig Hullinger wrote:
"I would eliminate it for second homes, boats and motorhomes, and limit it to one $300,000 mortgage. The present deduction encourages too much investment in very expensive homes - investment that could and should be made elsewhere.
The tax deduction on home equity lines encourages people to borrow on their homes, which was part of the problem with all the defaults. The deductions on mortgages and home equity lines are part of the real estate bubble and crash - which we are all paying for now.
I would do it slowly, though, say phase in over 5 - 10 years to keep from shafting people who took out two large mortgages based on the current tax code. And we don't want to hurt the housing market during its present downturn, so it should phase in slowly.
In general I think taxes that effect me should go down or be eliminated, while taxes that effect other people should go up." "Joke intended"
"Having been in real estate in my prior life, I had 300 closings and don't remember one person who bought a home because of the deduction. Maybe it happened a few times, but it certainly is not a big consideration for many buyers.
But then most folks would not need to itemize deductions, and will choose instead to take the standard deductions. And if they don't itemize they won't get credit for charitable deductions so donations will fall dramatically. Unintended consequences. Most of Schedule A
deductions are unneeded until you get to catastrophic medical costs or charitable donations. They can figure out something to do to keep those two viable."
"The mortgage deduction is the only tax deduction we get now. We used to save every receipt, add it up, and deduct all the tax we paid on things.Now it is only our house. Comes in handy."