MortgageRegulations

MID ‘a wasteful use of federal resources,’ says housing group

Introducing a capped tax credit and reducing MID-eligible mortgages to $500K are two proposed solutions
  • A low-income housing group released a report last week that says the mortgage interest deduction (MID) disproportionately benefits wealthy homeowners and proposing three big changes.
  • It suggests reducing MID-eligible mortgage amounts from $1 million to $500,000, introducing a 15-percent capped tax credit, and reinvesting the savings from these proposals into affordable rental housing.
  • NAR believes tweaking the MID "amounts to a de facto tax increase on current or future homeowners."

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How can the United States tackle the increasingly problematic issue of homelessness and housing poverty? The National Low Income Housing Coalition (NLIHC) thinks that reforming the mortgage interest deduction (MID) is the way to move forward. But it's going to have to lobby against the National Association of Realtors (NAR), which released a study earlier this year that showed taxes for middle-income homeowners (earning between $50,000 and $200,000 annually) rising instead of falling if MID is reformed. What is the MID? When most people buy a home, they use a mortgage loan to do it -- and the bank charges them interest on that loan, which they pay over the loan's lifetime (15 or 30 years are most common). One of the perks of homeownership is that this mortgage interest is tax-deductible -- so when homeowners prepare their taxes before April 15, they can reduce the amount of money they owe by what they paid on mortgage interest in the calendar year. This isn't the first time ...