Tax Deduction On Mortgage
January 30th, 2009
Question: Impact if mortgage interest tax deduction was abolished?
Economically speaking, what would the LONG TERM (after the dust settles) effect be if the tax deduction for mortgage interest were removed?
Answer: The principal benefit of the mortgage interest tax deduction is a cash flow bonus at fiscal year-end, which indicates that those wishing to purchase property would have to establish a stronger cash flow in order to do so, thus decreasing the volume of sales in the housing market.
It is nearly impossible to tell the overall result this would have on housing prices (a slowdown in increase, or an actual downward pressure) or on mortgage rates (ditto), because of the complexities of both markets.
The only certain result would be a decrease in activity in the housing market, and likely a decrease in charitable deductions (since these are of little tax benefit to people who don’t enjoy the mortgage interest deduction).
I’d like to think there’d be a drastic increase in affordability of housing, but I think too many structural shifts (size of housing, ease of use of infrastructure for commuting, etc) would have to take place for this result to occur.
Items on Amazon Right Now for Tax Deduction On Mortgage:
2009 Tax Deadline Approaches
Dec. 31 is the last day to take advantage of Tax Deductions for this year.
TAX DEDUCTIONS? MORTGAGE-FREEDOM.COM
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