Friday, December 14, 2012
The LA Times asks what will become of America's favorite tax deduction:
President Obama's deficit commission proposed lowering the limit on
mortgage principal eligible for a deduction to $500,000 from the current
$1 million, removing any break for interest on a second home and
turning the deduction into a tax credit capped at 12% of interest paid.
A tax credit would allow homeowners who don't itemize deductions to subtract the interest from the taxes they owe. But while more taxpayers could take advantage of the benefit, a cap would mean those with large mortgages on expensive homes couldn't get a credit for all the interest they pay. Other proposals have called for similar changes.
Supporters of the tax break worry that proposed changes would not only push down prices but also spook potential buyers.