The National Commission on Fiscal Responsibility and Reform's proposal to limit mortgage interest tax deductions has drawn criticism from housing and mortgage industry groups. The commission, a bipartisan panel, released its draft proposal Wednesday.
Listed as one of the options for tax reform is the recommendation for mortgage interest deductions to exclude second homes, home equity loans and mortgages over $500,000. The panel has insisted that all options – including changes to the mortgage deduction – remain on the table.
‘The mortgage interest deduction is one of the pillars of our national housing policy, and limiting its use will have negative repercussions for consumers and home values up and down the housing chain,’ Mortgage Bankers Association (MBA) Chairman Michael D. Berman said in a statement.
Tweaking the deduction would be a ‘major setback’ for the nascent housing recovery, National Association of Home Builders (NAHB) Chairman Bob Jones said.
‘It would disrupt the plans of young households who are gathering their financial resources to purchase a home,’ Jones said. ‘And it would impose a substantial tax burden on existing home buyers, many of whom continue to stay current with their mortgage payments even as they struggle to make ends meet.’
The MBA also expressed concern about the commission's proposals to tax dividends and capital gains at ordinary tax rates. The impact would negatively affect investment in commercial real estate, Berman said.
SOURCES: National Commission on Fiscal Responsibility and Reform, NAHB, MBA