Mortgage Interest and Property Tax Deduction
Published May 11, 2013
By Patrice Willetts
Tax reform is a big buzz-word in Raleigh these days as the North Carolina General Assembly looks at reforming how the state collects revenue from its citizenry.
As President of the North Carolina Association of REALTORS®, which represents 31,000 REALTORS® in every community and county in our state, I want to voice our support for tax reform measures. Our only word of caution is don’t pass tax reforms that are going to hurt our fragile housing market.
Clearly, we are seeing signs of recovery. Just last week the U.S. Department of Labor announced the lowest unemployment rate in our country for the past four years. In North Carolina, we are seeing positive signs of sales in our housing market, We need to keep the momentum moving – because we all know the troubles we have seen over the past five years of The Great Recession.
That’s why we are closely monitoring legislative efforts in Raleigh that could threaten our housing and real estate economy. Legislative proposals to eliminate the mortgage interest and property tax deductions will have a negative impact on our state’s real estate economy.
Taking away mortgage interest and property tax deductions for homeowners will devalue their property, hurt people who are currently in the market to purchase a home and will end up costing us precious jobs and hurting our overall economy. The mortgage interest and property tax deductions are vital to the stability of the American housing market and our economy. Eliminating these two important tax provisions will be a de facto tax increase on North Carolina’s homeowners.
These legislative proposals will change market dynamics that will destroy wealth accumulation for our middle-class families who have worked hard, played by the rules and deserve to be able to reap the benefits of buying a home. Additionally, elimination of the deductions in NC is not just a state issue, but one that other states and the federal government will watch closely. If there is a perceived momentum swing away from the MID and property tax deductions in NC, that could lead other states to do the same and eventually lead to the elimination of the deductions at the federal level. The housing market cannot afford a hit such as this, especially not now.
Eliminating tax deductions for home ownership isn’t tax reform. It will just end up making our families pay more and will do severe damage to our state’s recovering economy. That’s the bottom line and that’s why REALTORS® across the state are raising these concerns.
Patrice Willetts, 2013 President of the NC Association of REALTORS®
May 11, 2013 at 3:35 pm
dj anderson says:
Of course Realtors are against doing away with the home mortgage deduction, and this blog could have included a protest of adding sales tax on sales of homes. Taxes do hurt sales commerce. Taxes produce nothing, but are necessary to grease commerce via regulation.
The thing is, the "welfare" to the upper classes via the mortgage tax break has become one of the talking points of class warfare the politicians are using to divide the voters. Reagan kept the tax break back in the 1980's and without it, Democrats say there would be no huge national debt today, and that is true, as it is with the Bush tax breaks.
I say, I'm not convinced, and it is time for this tax break to go.
Now, I'm against any sales tax since all are regressive, but oh so easy to collect, for the merchants do it for the state free of charge.
May 11, 2013 at 4:17 pm
dj anderson says:
Read the blog, went to the link, opened the petition and read that, too, and I agree with the premise that taxes are inevitable so let's make them easier to understand, adequate to make state government sustainable, not an undue burden to enterprise, and fair.
What is 'fair?' A sales tax, to me, is not fair. Any tax at all on anyone at all on at least the first $11,500 earned or spent is not fair in my eyes.
I applaud the CPA's for not advocating a more complex tax scheme, which would be self-serving.
May 28, 2013 at 6:15 pm
Richard Bunce says:
An increase in the standard deduction and elimination of the itemized deduction would be a more effective distribution of the benefit.
In 2010 of 142.9 million Federal returns filled only 37.5 million claimed the mortgage interest deduction. That is just 26% of returns. This deduction also has distributional issues with 2/3 or returns over $200,000 of income claiming the deduction. $53 million out of $68 million of the claimed deduction went to those returns with income above $100,000.
See pages 36 & 39
https://www.jct.gov/publications.html?func=startdown&id=4516
