Real Estate Roundup with Sharon Alva: Potential changes to the mortgage interest deduction
This past month, the Realtor community tried to get the attention of members of the U.S. House of Representatives by making some 20,000 phone calls urging them to protect the mortgage interest deduction (MID).
President Obama created a bipartisan Deficit Reduction Commission created in February and charged it with identifying spending cuts and tax changes that would cut $4 trillion in debt over the next decade. The commission, which recommended capping eligible mortgages at $500,000, changing MID into a credit, and eliminating the deduction for second homes and home equity loans, didn’t get enough votes to have its recommendations considered by Congress. But some parts of the plan are expected to be included in the administration’s budget request next year.
The National Association of Realtors and various state associations are afraid the tax changes will erode the federal government’s historical support of home ownership. Among Realtors’ concerns is that the negative impact on housing markets of MID and other changes could hurt the already weak condition of the country’s job market.
To get a sense of the impact on homeowners in our area, where many loans are larger on average then they are in other parts of the country, I pulled numbers on loans over $500,000 that would be affected by these changes, should they come to pass.
In Alameda County, 179,544 loans are in public records. Of these, 28,250 are over $500,000. That means 15.7 percent of borrowers would see smaller deductibles and therefore increased taxes.
In the city of Alameda this includes 19 percent of loans on residential properties. Of the 7,319 residential loans, 1,387 are for over $500,000.
Sharon Alva is a real estate agent with Alain Pinel Realtors, living in Alameda. You can reach her at firstname.lastname@example.org or (510) 764-4921.