Monday, Dec. 10, 2012 | 2:01 a.m.
In an effort to find revenue sources and avoid the looming “fiscal cliff,” Congress and the White House are debating limits on a wide range of tax deductions. One of these is the mortgage interest deduction, a widely utilized tax break that Realtors believe is vital to the stability of the American housing market and our economy.
Specific legislation capping or eliminating the deduction has not been introduced. However, some pundits and experts have suggested that it could or even should be on the table as policymakers in Washington look for ways to address the U.S. budget deficit.
The National Association of Realtors has always been a supporter of the deduction. As 2013 NAR President Gary Thomas said: “Until Congress introduces specific legislation, there’s nothing to say about any proposed changes to the mortgage interest deduction. We will remain vigilant in opposing any future plan that modifies or excludes the deductibility of mortgage interest.”
If a deal is not reached, many believe a “fiscal cliff” could do severe damage to the economy nationally, and especially here in Nevada, where we’re still digging our way out of the worst economic downturn since the Great Depression. Some experts fear we could fall back into a recession if a solution is not reached. Of course, we Realtors believe this could have a significant effect on a housing market that is just beginning to rebound.
We’ve made some progress this year, but the housing market here in Nevada is still healing. Another recession could severely impact the strong sales pace and housing price appreciation we’ve experienced this year.
The debate over limiting deductions is an important one, but the deduction should not be part of it. Too many Americans rely on this crucial tax break.
This longstanding tax deduction encourages and sustains homeownership by reducing the carrying costs of owning a home. It also benefits families with moderate and below-average incomes, with 65 percent of families who claim the deduction earning less than $100,000 per year. In addition, American homeowners already pay 80 to 90 percent of U.S. federal income tax, and their share would rise if the deduction were eliminated or reduced.
Changes to this important homeownership benefit would harm the financial health of millions of hardworking middle-class families and dash the dreams they’ve worked hard to achieve, such as college, retirement or starting a small business.
The ability to deduct the interest paid on a mortgage can mean significant savings for many families in Nevada and throughout this country.
Tampering with the deduction could tip the economy into another recession, resulting in further job losses — something we can’t afford here.
It could effectively put the American dream out of reach for millions, shutting the door to homeownership. Realtors will fight hard to keep that door open for current and future generations.
Blane Johnson, of Incline Village, is the 2012 president of the Nevada Association of Realtors.