Mortgage Interest Deduction: Seeing the EXIT DOOR?
One of the provisions proposed by the Obama administration for reform in the upcoming budget is a change to the mortgage interest deduction for homeowners. The current budget proposal would apply to upper income earners, anyone making over $250,000 a year, and it would cap their interest deduction at a 28% tax rate. If that earner was in the 35% tax bracket, it wouldn't matter, they would still be subject to the max 28% rate.
The scary part about this proposal is that if this gets approved I'm sure it will eventually come into play for all homeowners and not just high earners. Who knows, eventually... no mortgage deduction, which some countries already practice. I suspect the second home interest deduction will go by the wayside too. Think of all the tax revenue this will increase for the feds.
Many property owners in the Mt. Hood Corridor from Government Camp to Welches and Brightwood would see a substantial hit from the second home mortgage deduction termination because so many homes in our area are second homes. This would impact home values by sending them lower with less tax benefits for owning a second home.