Efforts to Lessen Home Mortgage Tax Deduction Divide Real Estate Industry

Article excerpt

NEW YORK - Some housing and real estate folks are prepared to quash any attempts to lessen the tax deduction of home mortgage interest, suggesting that such efforts would be an attack on the American dream itself.

Others in the industry, however, question the threat to home ownership, mainly because the current indebtedness cap - the limit on mortgage interest that may be deducted from taxes - is $1 million.

In their view, an allowance of that size benefits very few Americans and, as a corollary, provides a huge tax deduction for a privileged few - one that may have very little to do with providing shelter.

The issue is controversial even within the industry.

A commentary by Nestor R. Weigand Jr., president of the National Association of Realtors, warning that some members of Congress wished to cut the million-dollar cap, drew both negative and positive responses.

Perhaps typical of the negative responses was a letter to the editor of Realtor News, the association's weekly newspaper, stating that ``those fortunate enough to own a lavish home do not need the large tax savings.''

The most commonly cited reason for opposing any cut in the deductibility seems to be that one cut might be followed by more, perhaps even leading to eventual elimination of any deduction of home mortgage interest.

Defending that stand, another letter to Realtor News cautioned that when Congress is thwarted in attempts to raise taxes, members ``could merely lower the cap on the mortgage interest deduction and then tell their constituents that they were able to stave off any attempt to raise taxes.''

Whatever the merits or lack of them, the tax deductiblity has produced some situations that are difficult to equate with the promotion of home ownership. …

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