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Romney to eliminate mortgage interest deductions on second homes?

This year, Obama asserted that he would do away with mortgage interest deductions, and now, Romney is said to have plans to eliminate mortgage interest deductions on second homes, adding pressure to a trade organization lobbying against any changes.

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Mitt Romney speaking to supporters at a grassroots early voting rally in Mesa, Arizona, photo by Gage Skidmore.

Mitt Romney comments spur speculation

At a private fundraiser in Palm Beach, assumed Republican Presidential nominee Mitt Romney was overheard by eavesdropping reporters on the sidewalk, saying he wants to do away with the mortgage interest tax deduction for second homes. This potential elimination is likely part of his stated goal to cut individual tax rates by 20 percent, but is surrounded by speculation as Romney has not offered much information on his plans for housing.

According to Bloomberg1, the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution estimate this one cut could amount to $10 billion. There has been no mention that Romney intends to cut all of the mortgage interest deductions (MID) for Americans, just on second homes, but the National Association of Realtors (NAR) has fought and lobbied to keep the MID in tact.

Although NAR does not comment on the presidential race or candidates’ positions directly, or on hypotheticals (which is what some say Romney’s comments amount to), Pamela Kabati, Senior VP of Communications at NAR said to AGBeat, “That said, I can tell you that NAR opposes changes to the existing law regarding MID, and that any change to any aspect of current tax law will be an issue for Congress to decide. Given that the housing market is beginning to show improvement, NAR believes that now is not the time to speculate about hypothetical changes to existing law.”

Obama’s plans for the MID

As part of his fiscal year 2013 budget released in February, President Obama announced his plan to “cut waste,” which not only included the mortgage interest deductions for homeowners, but taxing of general partners in investment partnerships which NAR reports includes “real estate partnerships, as ordinary income rather than as capital gains, which is taxed at 15 percent. If taxed as ordinary income, it could be taxed at a higher rate, depending on the taxpayer’s tax bracket.” The intention of this tax is aimed at hedge fund partners, NAR notes, but real estate investors may be included in the tax.

Romney is said to plan elimination of the MID on second homes and Obama aims to eliminate the MID altogether, both of which the NAR opposes. NAR President Moe Veissi 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.”

NAR may not win the overall battle to keep the MID completely in tact, but in an election year, it is unlikely that anything will change until after it is clear who the President will be in the next cycle, which dictates the destiny of mortgage interest deductions.

1 Bloomberg report

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you’d like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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18 Comments

18 Comments

  1. Giuseppe Jp Piccinini

    May 10, 2012 at 6:31 pm

    Difference is “second homes”.

  2. AgentGenius

    May 10, 2012 at 6:31 pm

    agreed. do you support the MID? were you surprised it has even come up from the Romney camp?

  3. Giuseppe Jp Piccinini

    May 10, 2012 at 6:31 pm

    Not really – he has the GOP nomination now so he can be more liberal. I support the elimination of MID on second homes, but would like to see capital gains taxes eliminated on 2nd homes. its only fair.

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Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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