When filing taxes, homeowners can deduct from their taxable income any mortgage interest paid (up to $1M) on a first or second home and the interest paid on up to $100,000 of home equity debt. Aside from building equity, the mortgage interest deduction (MID) is an attractive part of homeownership, and a tax deduction that is often contentiously mentioned in conjunction with tax reform. <\/p>\n
So, what are the presidential nominees’ feelings toward keeping, reducing, or eliminating the MID? Further, why is the first thing on the chopping block when politicians talk about tax reform?<\/p><\/blockquote>\n
Why is it even a topic of discussion?<\/h2>\n
Let’s start with the latter – the idea that the MID is low-hanging fruit, and it is threatened anytime a politician believes they can use a machete on the budget instead of a surgical knife. <\/p>\n
Congress’ Joint Committee on Taxation states that the MID represents $75 billion in cash that doesn’t flow into the Treasury. Coincidentally, that $75B would have canceled out almost all of the “sequester” budget cuts. Yet it remains critical<\/em> to homeownership and appealing to first time buyers – and we’ve all seen what happens when our housing market crashes. Hence it remains. <\/p>\n
Some object to the deduction, claiming that mostly middle- and upper-income households benefit and President Obama’s own National Commission on Fiscal and Responsibility Reform proposed the MID be converted into a 12 percent credit and capped at $500k of mortgage interest, and elimination of the deduction for equity and second homes (the proposal has gone nowhere).<\/p>\n
Add a dash of political warfare<\/h2>\n
It became a topic of interest again during this political campaign season when 16 Republicans were vying for the presidential nomination, each offering creative tax reform measures.<\/p>\n
Rand Paul didn’t want to touch the MID, Bobby Jindal wanted to cap it at $550k, Marco Rubio sought a $300k cap, Jeb Bush pushed for 2 percent of adjusted gross income, Rick Santorum proposed a 20 percent flat tax with no deductions besides the MID which would be capped at a $25k total write-off annually. Meanwhile, Ben Carson said he would not only cut the MID, but charitable giving deductions. <\/p>\n
On the opposite end of the spectrum, Bernie Sanders had for decades proposed a $300k cap and limiting itemized deductions to a 28 percent maximum rate. <\/p>\n
trump calls it “critical to the health of the economy” <\/p>\n
Where do the remaining candidates stand?<\/h2>\n
Green Party nominee, Jill Stein<\/strong> wants to decrease the $1M home value cap on the MID, taking the position that not reducing the cap simply subsidizes Americans living in the most expensive homes. <\/p>\n
Libertarian nominee, Gary Johnson<\/strong> intends to eliminate the MID, stating that bigger homes get bigger tax breaks, driving up prices for all homeowners. His campaign has called the MID a “distortion” of the housing market which “subsidizes” anyone with an “expensive” home.<\/p>\n
Democratic nominee, Hillary Clinton<\/strong> would limit the deduction for the higher-income brackets, and while her final tax plan remains unclear, but at one point, she echoed Sanders’ 28 percent max rate idea.<\/p>\n
Republican nominee, Donald Trump<\/strong> has put forth a tax plan that doesn’t touch the MID. \u201cYou know, a lot of people were worried about real estate,” he said at a rally in New Hampshire. “Try taking the mortgage interest deduction out, you\u2019ll see what\u2019s going to happen to real estate. You want to see a crash? Try that one.” Perhaps that’s why engaged Realtors favor Trump<\/a> (he’s in real estate himself). <\/p>\n
#MID2016<\/h3>\n","protected":false},"excerpt":{"rendered":"
(HOMEOWNERSHIP) With the mortgage interest deduction (MID) seen as critical to homeownership, do you know what *your* candidate believes should happen to the tax deduction?<\/p>\n","protected":false},"author":335811,"featured_media":7838,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"wds_primary_category":0,"footnotes":"","jetpack_post_was_ever_published":false,"_links_to":"","_links_to_target":""},"categories":[602],"tags":[323,1004],"class_list":["post-8557","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-homeownership","tag-homeownership","tag-mid"],"jetpack_featured_media_url":"https:\/\/theamericangenius.com\/housing\/wp-content\/uploads\/sites\/2\/2016\/05\/trump-clinton.jpg","jetpack_sharing_enabled":true,"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/posts\/8557","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/users\/335811"}],"replies":[{"embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/comments?post=8557"}],"version-history":[{"count":9,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/posts\/8557\/revisions"}],"predecessor-version":[{"id":8612,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/posts\/8557\/revisions\/8612"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/media\/7838"}],"wp:attachment":[{"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/media?parent=8557"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/categories?post=8557"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/theamericangenius.com\/housing\/wp-json\/wp\/v2\/tags?post=8557"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}