WASHINGTON — Two Washington insiders, speaking during the National Association of Realtors midyear conference last week, said the debate over changes to the mortgage interest deduction is largely for show, and that major changes are unlikely.

The mortgage interest deduction is a "sacred cow that has been under attack for years," but support for housing and the MID remains strong on Capitol Hill, said Paul Equale of Equale & Associates.

NAR strongly opposes any changes to the mortgage interest deduction, saying such changes could

WASHINGTON — Two Washington insiders, speaking during the National Association of Realtors midyear conference last week, said the debate over changes to the mortgage interest deduction is largely for show, and that major changes are unlikely.

The mortgage interest deduction is a "sacred cow that has been under attack for years," but support for housing and the MID remains strong on Capitol Hill, said Paul Equale of Equale & Associates.

NAR strongly opposes any changes to the mortgage interest deduction, saying such changes could  further depress home prices by up to 15 percent.

"Controversial issues have a tendency to get teed up in election years," the political consultant and former Democratic Party official said, and sometimes issues are put into play "for purely political purposes."

But support for changing the MID is mostly confined to the far right and far left, Equale said, with those in the center wary of the claimed benefits of scaling it back.

"If you take away the MID, or change it dramatically, that would have an even more Draconian effect on housing markets," Equale said. "I would argue that, like in the supply-side economics debate, you’d be creating a situation where the government would be getting less tax revenue, because the pie would be shrinking."

David Horne, senior counsel for Washington lobbying firm Russ Reid and former chief of staff at the Department of Housing and Urban Development under the Bush administration, agreed.

In 2005, a Tax Reform Panel recommended converting the mortgage interest deduction to a 15 percent tax credit on mortgage debt of up to $400,000. The Congressional Budget Office (CBO) estimated that change would have generated $418.5 billion in tax revenue between 2008 and 2017.

"What you have is a savings that is in Washington only, with OMB (the Office of Management and Budget) and the CBO telling you it’s going to save the federal government trillions, when the reality is it’s going to cause the real estate market to go further into recession," Horne said.

"This is not the time for Congress to mess with one stable factor in the housing marketplace that the average consumer understands as a very good reason to get into the market," Equale said.

For now, Congress and the Obama administration have been leery of raising taxes, with President Obama signing into law December legislation that extended Bush-era tax breaks for two years.

A recent report by a bipartisan deficit reduction commission, the National Commission on Fiscal Responsibility and Reform, projects that by 2025, federal tax revenue will only pay the interest on the national debt. The commission recommended returning spending to 2008 levels by 2013, and eliminating hundreds of tax breaks that reduce tax revenue by more than $1 trillion a year.

The commission’s final report recommended that the mortgage interest deduction be changed to a 12 percent nonrefundable tax credit, with only the interest paid on debt of up to $500,000 on a principal residence eligible. Homeowners are currently allowed to claim an itemized deduction for interest paid on total mortgage debt of up to $1 million on both their principal and second homes.

Speaking of the commission’s recommendations during a separate NAR conference session that focused on commercial real estate, Charles Achilles, chief legislative and research officer for the Institute of Real Estate Management, said that though the report was not adopted by the full commission, "it has some legs" in Congress.

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