President Obama has now presented his 2013 fiscal year budget and while many believe Congress will not support the proposed cuts and added spending, the National Association of Realtors (NAR) is focusing on the mortgage interest deduction (MID). NAR notes that “As in previous years, the budget would reduce the value of itemized deductions to 28 percent for married couples with incomes over $250,000 and individuals with income over $200,000. Currently, depending on the tax bracket these households are in, the value of their deductions could be as high as 33 or 35 percent.”
NAR President Moe Veissi said in a statement that the association would strongly oppose this or any proposal that would limit MID and other itemized deductions. “The mortgage interest deduction is vital to the stability of the American housing market and economy. We urge the president and Congress to do no harm” to today’s fragile economic recovery, Vessi said. “The nation’s homeowners already pay 80 to 90 percent of U.S. federal income taxes. Raising taxes on them, now or in the future, could critically erode home values at all price levels.”
Of the $3.8 trillion budget, NAR notes “several hundred billion would be new spending for infrastructure, research and development, and other priorities of the administration. The budget envisions cutting about half a trillion dollars from the defense budget, and another roughly half a trillion dollars through tax law changes, including the NAR-opposed curbs to the value of MID for upper-income households. More savings would come from allowing tax cuts enacted during President George W. Bush’s administration to expire for all households except those earning less than $250,000.”
NAR has made it clear they oppose any reduction of mortgage interest deductions and while the overall budget will not likely be passed in its current form, the association has many challenges ahead as they fight to keep the deductions alive.
We feel the President’s inclusion of mortgage interest deduction is just one of the items he fully expects to get chopped by Congress, and he’ll go along with their axing this item in exchange for other cuts he wants made worse than the mortgage interest deduction. What do you think? We’d love to know your feelings about this being back in the new budget proposed by the President.