There is a big issue affecting many homeowners in discussions in Congress right now, and whether you personally take the Mortgage Interest Deduction or not, this could be a big deal for your house value.
Why? Many Americans do take the mortgage interest deduction on their federal taxes each year. If you bought a house and put less than 20% downpayment, then it is likely you pay this insurance/interest.
Should the deduction be removed, it could affect many Americans — and NOT just those who take the deduction.
Often times, when homebuyers consider whether a house is truly affordable, they consider how a reduction in taxes may help. Property taxes, improvements, and for many, mortgage insurance. Even if you do not take this deduction, the removal of the deduction could possibly hurt your property value. How?
Let’s use the example of Mr. & Mrs. Homebuyer, would have gotten a tax reduction of $250/month from their mortgage interest. That $3,000/year could mean a certain house they’ve had their eye on is definitely affordable, knowing that $250 of their monthly payment would end up coming back to them when they file their taxes.
If that deduction goes away, that same house is possibly $250/month too high out of their price range. SO, the house may not be worth that higher price that it may have been when the tax deduction was still in place. A CNNMoney.com article quotes the National Association of REALTORS(R) President, Ron Phipps, as saying house values could drop as much as 15%.
NAR states in their video about the mortgage interest deduction that:
The vast majority of households that take the deduction are middle-income families, earning either less than $100,000 a year or between $100,000 and $200,000 a year (the typical cut-off point between wealthy and non-wealthy households).
If you see the possible detriment to your house value, then the best way to fight this is to contact your local congressional representative.
Here is the link to contact your Baltimore County Council.
For the Baltimore City Council, you can find your district, then contact your local Baltimore City council member.
The reason to help fight to keep the mortgage interest deduction in place is to hopefully retain your house’s value. In this distressed market as it is, this could make house values drop even more!
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[…] bring values down further, as I talked about last January when the government wanted to remove the mortgage interest tax deduction across the […]