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Home >> News >> Data >> Should Officials Do Away With Mortgage Interest Deduction?
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Should Officials Do Away With Mortgage Interest Deduction?

Should Officials Do Away With Mortgage Interest Deduction?

Talking heads call the mortgage interest-rate deduction a sacrosanct giveaway for the tax code, a loophole as sacred for Americans as, say, Social Security or Medicare ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô and just as electric to politicians.

But a new survey out from ""Zillow"":http://www.zillow.com/ suggests that may not be the case anymore.

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According to the real estate website ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô which notably conducted the survey with economists and real-estate experts instead of your average homeowners ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô 10 percent believe the mortgage interest-rate deduction should be thrown out as soon as possible, while 50 percent believe it ought to be phased out over time.

Only 10 percent thought it should remain the way it is, with 30 percent saying that eligibility deserves more restrictions at the very least.

""Although the mortgage interest deduction remains enormously popular with existing and aspiring homeowners, it costs the federal government about $90 billion a year,"" Pulsenomics LLC founder Terry Loebs said in a statement.

Tell that to homeowners and renters. A ""cross-party poll"":http://www.themreport.com/articles/three-in-four-voters-back-federal-housing-aid-nahb-2012-01-11 of some 1,500 respondents in January found a whopping 73 percent of voters ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô including Democrats, Republicans, and independents ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô in support of the mortgage interest-rate deduction. (Interestingly, even 67 percent of voters identifying with the anti-government-anything Tea Party crowd lined up against lawmakers trying to remove it.)

It's easy to see why many Americans love their mortgage interest-rate deductions.

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According to our sister publication, _DS News_, Americans can ""deduct interest"":http://www.dsnews.com/articles/math-behind-mortgage-interest-deduction-2011-07-29 on up to $1 million of their mortgage debt and $100,000 on home-equity loan debt.

But as _DS_ points out, those savings pack a punch, scrapping $94 billion in annual revenue that the federal government would otherwise collect ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô a likely reason why economists and real-estate experts begrudge the deduction in the first place.

""Time will tell whether the unprecedented fiscal challenges facing the U.S. coupled with a housing market now on the mend will embolden more policymakers to touch this lightning rod,"" Loebs added.

These bright guys also had some bright news for the housing market, according to Zillow, which found the consensus saying that home prices could rise by a total of 2.3 percent this year. More optimistic thinkers projected a 4.4 percent increase.

""It's refreshing to see this optimism at a time when the market seems to be making an organic recovery, in the absence of an artificial stimulant like the tax credits,"" Zillow Chief Economist Stan Humphries said in the statement he shared with Loebs.

And there was more, too: apparently, the economists polled by Zillow favor the Republican ticket this year. Forty-five percent of those surveyed said GOP presidential nominee and former Gov. ""Mitt Romney"":http://www.mittromney.com/ (R-Massachusetts) aligned with their beliefs, while just 34 percent nodded at President ""Barack Obama"":http://www.whitehouse.gov/administration/president-obama.

Of those same respondents, 47 percent believe Obama will steer more policy changes into the housing industry, with 21 percent behind Romney and 32 percent suggesting ""no material difference"" between the two.

Oh, and in case you were wondering, 91 percent opposed recent measures underway in California to seize underwater properties under eminent domain law to refinance those loans and offer ""fair value"" compensation to investors.

*Do you agree that policymakers should axe the mortgage interest-rate deduction? And will home prices rise significantly this year, like economists predict?*

Don't wait for us to poll you ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô give us your two cents by sending an email to [email protected] for a chance to appear in our monthly magazine.

About Author: Ryan Schuette

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Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

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