Chavez: Scandalous Suggestion from Debt Commission



Linda Chavez

 From Townhall.com - As if the collapse in the housing market had not done enough damage to the U.S. economy, the president's debt commission is now proposing changes that could take the industry off life support. Among the recommendations in the commission's 65-page report is one to eliminate the tax deduction for mortgage interest on homes over $500,000 (the current limit is $1 million) and restrict it to primary residence only. The recommendation would also eliminate interest deductibility for home equity loans (which are currently capped at $100,000). The effect of these changes would be to immediately reduce the value of all homes by as much as 15 percent. Here's why. Homeowners currently are allowed to take an itemized deduction for the interest they pay on their home mortgages. With conventional loans, most of the payments in early years go to pay interest on the loan, with only a tiny fraction going to principal. Although most home purchasers may not think of it this way, when they buy the house under our current tax system, they've invested not only in a place to live but also in buying an asset. The value of that asset will be determined by its future appreciation -- or in recent years, its depreciation -- but also in the value of the tax deduction they receive on the mortgage interest. Read full column here:

Chavez: Scandalous Suggestion from Debt Commission