NEWS & EVENTS

WASHINGTON – Dec. 1, 2010 – The bipartisan Deficit Reduction Commission – charged with finding a comprehensive plan to lower the national deficit with input from both Republicans and Democrats – has issued its final report. The commission must, by law, report its recommendations to President Obama.

The National Association of Realtors® has been waiting for the final report, aware that one recommendation could impact the mortgage interest deduction (MID) on federal income taxes. At one point, the association feared that the commission could recommend a complete loss of the deduction, which allows homeowners to deduct the yearly interest amount they paid on a home mortgage.

The report did end up recommending a weakening of the MID though not complete removal. Specifically, it calls for a “12% non-refundable tax credit available to all taxpayers.” However, it does call for removal of two current uses of the mortgage interest tax deduction: second homes and home equity loans.

NAR promises to fight any move to water down the current deduction rules.

“NAR firmly believes that the mortgage interest deduction (MID) is vital to the stability of the American housing market and economy,” says NAR President Ron Phipps. “The MID must not be targeted for change. NAR is actively engaged on behalf of the nation’s 75 million homeowners and 1.1 million Realtors to ensure that the current deduction is not modified.”

While the Deficit Commission’s suggestions carry a lot of weight, it’s not a final law; many specific recommendations will probably not make it into law as written. NAR plans to use the full force of the Realtor organization to fight MID changes.

“The tax deductibility of interest paid on mortgages is a powerful incentive for homeownership and has been one of the simplest provisions in the federal tax code for more than 80 years,” says Phipps. “Recent progress has been made in bringing stability to the housing market and any changes to the MID now or in the future could critically erode home prices and the value of homes by as much as 15 percent, according to our research.”

NAR has already taken the following steps:
• Submitted to the Washington Post an op-ed written by Phipps.
• Phipps, NAR President-elect and former Florida Realtors President Moe Veissi and NAR Chief Economist Lawrence Yun will be available for media interviews throughout the day.
• If appropriate, NAR will send out an e-mail Call for Action to all members, asking them to call their U.S. representatives.
• Additional op-eds by third parties and more interviews – from NAR officers, members of Congress and other interested parties – will continue.

What you can say:
• Any tampering with the MID in the midst of a foundering economy, a sluggish housing market and high unemployment is way off base.
• Government incentives for homeownership in the U.S. have existed for more than 150 years because homeownership fosters strong communities, creates social stability, builds wealth over the long term and contributes to the U.S. economy.
• Realtors believe that anyone able and willing to assume the responsibilities of homeownership should be able to pursue that dream.

“Any further downward pressure on home prices will hamper the economic recovery, raise foreclosures and hurt banks’ abilities to lend and likely tip the economy into another recession resulting in further job losses for the country,” says Phipps. “NAR will remain vigilant in opposing any plan that modifies or excludes the deductibility of mortgage interest.”

The complete 65-page report recommends tax and expenditure changes impacting most aspects of the U.S. budget and programs. To download the complete report (PDF format), click here. (http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf)

© 2010 Florida Realtors®