Tax season is underway and American home owners are once again enjoying the benefit of the mortgage interest deduction. The ability to deduct the interest paid on a mortgage can mean significant savings for these home owners.
For example, a family who bought a home last year with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file this year. This is why accountants ask you for mortgage interest when you are compiling your information on your tax returns. It is no small deduction.
A recent survey conducted by the National Association of REALTORS, American Attitudes About Homeownership, revealed that 74 percent of home owners and 62 percent of renters thought it was "extremely" or "very" important that the MID remain in place. Over half said that owning a home would be less attractive if mortgage interest was no longer tax deductible.
This is a scary revelation in light of the fact that the Obama Administration threw on the table in the budget proposal to do away or eliminate the mortgage interest deduction. From what I can see, the MID benefits the homeowner, and is an incentive to buy and own real estate.
There are little other deductions associated with real estate, and more penalties if you really look at it. If you sell will a profit, you are taxed on capital gains, you pay taxes every year just to own it, and if you transfer ownership in Michigan, you pay a State Transfer Tax.
Additionally there are countless other taxes one pays when owning a home that are hidden in utilities and services that are passed along to the consumer as fees. So in light of some of the recent temporary tax credits offered in recent years for buying and updating for energy efficiency, the Mortgage Interest Deduction has been the only mainstay annual deduction that homeownership has offered.
I know there may be differing opinions on its value, but I for one consider it to be an important tax benefit that I am willing to fight for.
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