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Old 02-13-2011, 11:28 AM   #21
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Originally Posted by samclem View Post
Fairer still: The government could get out of the business of "encouraging" home ownership. Their efforts to goose home prices with tax deductions, low interest rates, and unrealistically low down payment requirements helped build the bubble and crash for which we'll be paying a long time.
I agree. I'm just resigned to the fact that as long as there are politicians, the tax code will be used to their benefit. I believe the root of the tax break is that they (politicians) realize that home owners spend money. This helps the economy move along. (This thinking also led to the mortgage crisis and housing bubble, when it became a right to be a home owner) Thus give the home owner a tax break as a reward for spending money...

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Old 02-13-2011, 11:29 AM   #22
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I'd recommend phasing it out over 10 years by lowering the applicable mortgage limit 10% per year. It allows people who have signed contracts for mortgages the bulk of the benefit, encourages savings by repayment, and acts to reduce the new mortgages without crashing the market. Problem with that proposal is it give opponents 10 years to try to kill it.

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Old 02-13-2011, 11:32 AM   #23
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Originally Posted by jimnjana View Post
I agree. I'm just resigned to the fact that as long as there are politicians, the tax code will be used to their benefit.

There ya go. If politicians can enact some legislation that benefits folks they want to vote for them, even if the legislation is short-sighted in the so-called benefits it provides, they'll do it every time. Mortgage interest deductions benefitted mortgage lenders, real estate agents, etc who provide lotsa political donations and home owners thought the legislation was the best thing since sliced bread.

Actually, the legislation is bad for the economy in the long run, as most attempts by the gov't to buy votes turn out.
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Old 02-13-2011, 11:37 AM   #24
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Originally Posted by photoguy View Post
I agree with your reasoning that people buying now gain no real benefit from the mortgage deduction since prices are raised in response. However, to remove it now would certainly hurt those who already own a home.
Like any major change, it would have to be phased out slowly to minimize the impact . . . say 5% per year over 20 years would be pretty painless.

Having said that, we as a nation have zero tolerance for anything uncomfortable. So I expect all kinds of kicking, screaming, and foot stamping over any proposal that would actually save money, no matter how worthwhile on the merits.

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