(07/17/13) Lawmakers on Capitol Hill are planning to make changes to the federal income tax law that was written 100 years ago. These changes may include eliminating the mortgage interest deduction.
Right now, home owners can deduct the interest paid on their mortgage up to $1 million, plus $100,000 of home equity loans – and they can do the same on a second home.
"That provision for home ownership has been a tradition in America," said Jerry Gionvaniello, of the National Association of Realtors.
Congressman Dave Camp (R – MI) is the chairman of the House Ways and Means Committee. He's leading the charge on tax reform.
"We're trying to look at simplicity, we're trying to look at a fairer tax code, we're trying to get a pro-growth tax code," said Camp, who points to lowering tax rates and closing loopholes.
"If your rate is lower, does the home mortgage deduction need to look exactly like it does now? … We're going to look very carefully at that. It's an important part. It's been in existence for a very long time. So it's not something that's going to be taken lightly," he added.
The deduction costs the Treasury Department about $100 billion a year in revenues.
Some politicians want to can the deduction completely, others want to change it to a tax credit, and the President wants to limit the deductions for higher incomes.
Last year, the real estate lobby spent more than $80 million, and the National Association of Realtors is fighting to keep the mortgage interest deduction as-is.
"We've not done what we call a ‘call for action' in many years…our message is pretty much the way it was 100 years ago. Keep current law on mortgage interest deductions," Giovaniello said.
Congressman Dave Camp says tax reform is scheduled to be complete by the end of the year.
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