I heard a rumor that there are some people in the Bush administration who are looking to get rid of the deduction on mortgage interest. Is this true? While it seems like it would bring in a ton of extra money to the governmetn, wouldn't a whole lotta people get screwed by this?
No doubt they are "looking" at it, it's the kind of small stuff that administrations look at instead of doing something major to stop the bleeding. Not even sure it would bring in "tons" of revenue, remember you'd still have the standard deduction which is what we use anyway. Also IIRC it's fewer than 20% of filers that would be affected negatively.
Getting rid of it would also cause some people to stop making "bad" financial decisions: "I'll pay the bank ONE DOLLAR to keep from paying the government TWENTY FIVE CENTS", that's a bad financial decision.
I would be suprised if that actually did go thru, but they are talking about reducing the limit from $1MM down to about $300M. That is taking a deduction for the interest paid on a loan in the amount up to $300M. That is typically what gets people to itemize deductions. With 70% home ownership rate in the US, it is not for the majority benefit to reduce the limit. They also will only have revenue nuetral changes. Means they will only get rid of a tax dollar if they have another way to get that dollar back. Joe.