The government has been working hard to resolve deficit concerns and have decided to take a closer look at some credits that cost Uncle Sam a lot of money. Tax deductions to homeowner's who pay interest on their loan happen to be on the top of the list. The Obama administration is looking at different options. They can eliminate the deduction, reduce it, or change it so the qualifications and percentage that homeowner's can receive is lowered. They may do this by reducing the percentage of deduction, create a cap on how high a mortgage can be in order to receive a deduction, or eliminate it altogether.
The Obama Mortgage Interest Deduction 2010 is almost a sacred cow as it promotes home ownership. To avoid the unpopular back splash, Obama appointed a panel to look for ways of cutting the deficit. The panel is by far less than bipartisan since few members are conservative thinkers. However, you can be sure that if the elimination of the popular deduction comes about, the spin will be to blame some bipartisan commission's recommendation.
The upside is that there will be big improvements to the long term deficit issue that the government has been struggling with for many years. To further balance the budget, the government has been looking to take away from other various deductions, such as the child tax credit. If they succeed with all of the changes, the deficit can be worked down a great deal.
The down side to decreasing or discarding the mortgage interest rate deduction will not only take away the extra incentive people have to buy a home, but the change will come during a time when the real estate market has already crashed and is in desperate need of repair. This could possibly weaken the market even further due to the possibility that houses could sit on the market unbought because one of the biggest incentives are gone or greatly lowered.
If that happens, we will quickly see a large supply of houses on the market, while demand has faded. Then prices will go down more, causing more foreclosures and additional houses on the market. It was the $8,000 tax credit that saved housing from the same scenario, which lasted a year, from April of 2009 to April of 2010. It's logical to question if it is a wise decision to take away housing incentives, especially when we have not seen a full market recovery at this point.
The Obama Mortgage Interest Deduction 2010 is almost a sacred cow as it promotes home ownership. To avoid the unpopular back splash, Obama appointed a panel to look for ways of cutting the deficit. The panel is by far less than bipartisan since few members are conservative thinkers. However, you can be sure that if the elimination of the popular deduction comes about, the spin will be to blame some bipartisan commission's recommendation.
The upside is that there will be big improvements to the long term deficit issue that the government has been struggling with for many years. To further balance the budget, the government has been looking to take away from other various deductions, such as the child tax credit. If they succeed with all of the changes, the deficit can be worked down a great deal.
The down side to decreasing or discarding the mortgage interest rate deduction will not only take away the extra incentive people have to buy a home, but the change will come during a time when the real estate market has already crashed and is in desperate need of repair. This could possibly weaken the market even further due to the possibility that houses could sit on the market unbought because one of the biggest incentives are gone or greatly lowered.
If that happens, we will quickly see a large supply of houses on the market, while demand has faded. Then prices will go down more, causing more foreclosures and additional houses on the market. It was the $8,000 tax credit that saved housing from the same scenario, which lasted a year, from April of 2009 to April of 2010. It's logical to question if it is a wise decision to take away housing incentives, especially when we have not seen a full market recovery at this point.
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