Saturday, November 17, 2012

Options to Change or Replace Mortgage Interest Deduction

 As Congress, the President, and the people contemplate how to change the tax law in order to provide increases in revenues through increasing tax rates, closing loopholes, or increasing income through a vibrant economy, the mortgage interest deduction has been at the forefront of possible places to find new revenues.  There are few who suggest just eliminating the tax benefit, but many possible options for reducing or changing the current deduction. 

Among the proposals on how to change this huge "cost" to the government would be:
    ● Only eliminate this deduction for taxpayers in the $250,000 or higher income
       bracket
    ● Maximize the total amount that can be deducted by anyone
    ● End the benefit on second homes and vacation property
    ● Maximize the total of all deductions on Schedule A
    ● Eliminate the deduction immediately
    ● Phase out the deduction like was done with all other interest during the Reagan
       era

Do you have another approach or have you seen another option?  Please add in the comments.  


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