Just scrap the mortgage deduction entirely, or introduce an equal RENTER’s deduction. Eliminate the stupid bias in favor of buying. If the latter had been in place, the housing crisis would never have happened. Far too many stupid people were convinced (usually by brokers) to buy instead of rent because of this idiotic deduction.
The law should be changed so all interest is deductible — or none. The mortgage problems came from people taking second mortgages because it was the only tax deductible form of interest. There are people who bought cars with their home equity lines because it was “a great tax break.”
You need to ask why the brokers were pushing mortgages to the unqualified.
They were being strong-armed by the Feds and race-baiters like Eliot Spitzer. See http://www.freerepublic.com/focus/f-news/1994241/posts?page=9#9 for some valuable background.
The way I understand this provision is the reduction on the mortgage interest is for those homeowners making over $250,000. Those people are not likely to be a foreclosure risk like the buy-vs-rent clients who were “convinced” to buy.
This is just another way to punish the folks who are doing well and pay higher taxes anyway.
How about eliminate the stupid bias in favor of socialism?
Socialism, not a “bias in favor of buying” caused the mortgage problem.
And in order for it to pay off, you have to have a lot of other deductions.
The deduction does not benefit the buyer, as is often claimed. If it ever did, the benefit was short-lived.
No, it’s there for the benefit of the seller.
They were convinced by artificially low interest rates and the hope that they could make $50,000 in 6 months.