State of the Mortgage Interest Deduction


President Obama will give his State of the Union address tonight with
home builders anticipating his decision on the much talked
about Mortgage Interest Deduction. In late November, the
National Commission on Fiscal Responsibility and Reform released a proposal on how to
eliminate the deficit
and put
America on the correct financial path. One such change within the
proposal was eliminating the mortgage interest deduction that
homeowners can claim on taxes.

This was a hot-button issue at the International Builders’ Show this
year, and throughout the home building industry. The Wall Street Journal
published an article shortly after IBS about builders and the National Association of Home Builders
ready to fight the President

if he chooses to follow the Commission’s proposal.

With housing starts declining to 4.3 percent and building permits
increasing 16.7 percent in December according to the
U.S. Commerce Department, the building industry is still trying to find
its footing within the current
economic conditions. To some builders and the NAHB, eliminating a tax
incentive for homeowners may not be the best for the industry.

NAHB released a statement when the proposal was
released, “While we commend the hard work of the
President’s deficit commission to improve the
nation’s fiscal situation, this is simply the wrong approach
to the problem. It would put a huge tax increase on millions of
middle-class home owners by eliminating or devaluing the mortgage
interest deduction. The consequences would be devastating for housing
and the economy. This would further depress home prices, putting
countless more home owners underwater and triggering a new wave of
foreclosures. Eliminating or scaling back this vital housing deduction
will shrink the local tax base of many communities, causing already
cash-strapped state and local governments to further cut jobs and
essential services. Given the extreme fragility of the housing market,
with 21 percent of construction workers currently idled, tampering with
the mortgage interest deduction is just not sound public
policy,” said Bob Jones, chairman of NAHB
in the statement.

magazine reached out to NAHB Tuesday afternoon for a statement on what
they hope President Obama says in his State of the Union. They will
release a statement after the address in response to President Obama if
he discusses the mortgage interest deduction in his speech.

Follow the Twitter State of the Union conversation by using the hashtag
#sotu or #AskObama to ask him a question.

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