Why should the federal government penalize people for buying more expensive homes?
$500K may buy a mansion in Backwoods, Kentucky, but that only gets you a decent home in a nicer subdivision in many locations. This bill is more of the same old tired lie wrapped in shiny-new, Republican class-envy wrapping paper—it does nothing to reign in the EVER-GROWING FEDERAL SPENDING.
Don’t forget, how much was that $500,000 house worth twenty years ago, or thirty. Houses appreciate so at some point, all houses will exceed that fixed number and everyone will lose this deduction.
I don’t like the idea of the Federal Govt interfering in the home purchasing system, but they have been for many years. That is how we all have the idea that interest paid should be deductible. Can you remember when we used to be able to deduct all interest paid? This was to encourage going into debt. But the government finally stopped doing this. I believe student debt is deductible but under the new tax system it will not be.
All I can say about home mortgage deduction is that maybe the government should find another way to encourage home purchases — if that it the idea. As to purchasing an expensive home so that one has as large a mortgage as one can handle, I do not think that is a good idea. (I got burned by this once when my home price fell and I had to sell into a down market.) So you see the actions of the government to mess with a market cause lots of problems.
Now, one other thing, the places where this deduction loss hit the hardest are the high tax mostly blue states — and guess what? these are voters who say they want us all to pay more taxes. Is this political payback or karma?