C.A.R. says proposed change to deductibility of mortgage interest "DOA"

The proposed tax reform affecting the deductibility of mortgage interest will be "dead on arrival in Congress," says C.A.R. President Vince Malta.
California Association of REALTORS® (C.A.R.)
The proposal, submitted yesterday to the U.S. Treasury by the President's Advisory Panel on Federal Tax Reform, recommends converting the mortgage interest deduction to a tax credit equal to 15 percent of interest paid on mortgages, with the mortgage interest cap set to the average regional home price, ranging from $227,000 to $412,000. Currently, homeowners can deduct all the interest on mortgage loans up to $1 million on their primary residence.

"With the median price of a home in California at $543,980 and the average mortgage at least $435,180, the proposed ceiling would limit the tax break for the majority of new mortgagees in the state," said Malta.

Other changes that would negatively impact Californians are the proposed elimination of deductions for the interest paid on second home loans and home equity loans, as well as the elimination of the deduction for state and local taxes. According to NAR, second homes accounted for 36 percent of all home sales last year nationwide.

The Panel's Recommendations