Welcome to another Friday ! Today, we have an important item to make you aware of, if you have not already heard about it.
One of the most beneficial aspects of purchasing Real Estate is the deductibility of interest payments on the mortgage, however, that benefit could soon be erased from our tax code. The following Blog Post has been assembled from information provided by Ruth Potter of SaveMyMID.info, which is enlightening the Public on this real possibility, along with information she has provided from the National Association of Home Builders.
In 1913, the Government introduced the Federal Income Tax, and ever since that time, they have used the tax code to encourage home ownership. One such incentive is called the Mortgage Interest Deduction, or "MID".
The Mortgage Interest Deduction helps make home ownership more affordable, and it does this by allowing homeowners to deduct the interest that they pay on the mortgage for their home when calculating their annual Federal Income Tax. However, as the Federal Deficit looms, the Mortgage Interest Deduction is under fire, as a result of the effort to reduce the Deficit.
Therefore, proposed changes to the tax code would have a dramatic impact on homeowners and would significantly reduce the value of this deduction. You might have heard the Mortgage Interest Deduction referred to within the same topic as the Alternative Minimum Tax (AMT), another hotbed of debates and discussions.
The income tax deductions for mortgage interest and real estate taxes primarily benefit middle class taxpayers with incomes between $50,000 and $200,000 (according to the findings of a study by the National Association of Home Builders), contrary to assertions by some economists.
Taxpayers earning under $200,000 per year pay 43% of all income taxes, however, they receive 68% of the total benefit of the Mortgage Interest Deduction, along with 77% of the total benefit of the real estate tax deduction.
Additionally, larger benefits go to larger households and families, such as those with children, and as a share of household income, larger benefits are collected by families with less than $200,000 income, indicating that these tax rules make the tax system more progressive.
According to the National Association of Home Builders, or NAHB, research reveals that tampering with the Mortgage Interest Deduction would have a disproportionate impact (as a share of household income), on younger home owners. Therefore, this is some very important information for you to digest.
What can you do? Tell your Senator. Tell your Congress Representative. Let them know how you feel about this.
Have a Great Weekend, and Happy Rent-to-Owning !
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TAGS: #mortgageinterestdeduction #MID #AMT