Explore Properties at Southern California: 38.5 Million Reasons for Government to Retain the Mortgage Interest Tax Deduction

The National Association of REALTORS® has opposed any change or elimination of the current U.S. Mortgage Interest Tax Deduction.

The MORTGAGE INTEREST TAX DEDUCTION should be protected and retained.

Stability of our U.S. economy depends upon private real estate values and the industry. Buyers determine real estate values at least in part based upon the economic benefits of buying and owning, including deductibility of mortgage interest.

Mortgage Interest Tax Deduction Facts:

Most homeowners use the mortgage interest tax deduction.
51 million (68%) of the approximately 75 million owner-occupied houses in the United States in 2009 had a mortgage.
38.5 million taxpayers claimed a deduction for mortgage interest, deducting a total of $470 billion, in 2008.
The average taxpayer claiming the MID deducted $12,200 from taxable income in 2008.
Average taxpayer saved $3,050 in taxes by claiming the mortgage interest deduction (Marginal rates range from 10 to 35 percent. A 25 percent rate was used to calculate tax savings).
The total tax savings from the MID in the United States in 2008 was $117 billion.

Real Estate Tax Deduction Facts:

42 million taxpayers in the United States claimed a deduction for real estate taxes in 2008, deducting a total of $172 billion.
The average taxpayer claiming the real estate tax deduction subtracted $4,090 from taxable income in 2008.
Therefore the average taxpayer saved $1,020 in taxes as a result of the real estate tax deduction
The total savings from the real estate tax deduction in the United States in 2008 was $43 billion.

Projected losses for home owners and our country if these tax deductions are eliminated:

If the mortgage interest and real estate tax deductions were eliminated, the loss would not be a one-year event, and homeowners would lose out on these potential savings each year.
Present valueof these lost savings could total $3.2 trillion (Present value calculation assumes 5 percent discount rate and 1000 year time horizon).
Value of all owner-occupied real estate in the United States in 2009 was $19.3 trillion. If the lost tax savings are fully capitalized into the price of houses, the average decline in home value in the United States would be 17%.
From the individual perspective, the median priced home in the United States in the third quarter 2010 was $177,800. A decline in value of 17%, which was projected, would mean a loss in home value of $29,500 for the typical U.S. home owner.

Source: National Association of REALTORs®

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This is a follow up to our prior article - Property Values and Property Rights at Stake - Mortgage Interest Tax Deduction Should be Retained

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Harrison K. Long - Business Solutions and Advisory - REALTOR® and broker associate, Coldwell Banker Residential Brokerage - 949-854-7747 (phone) - ExploreProperties@gmail.com (email) - CA DRE 01410855 - www.LiveAtNewportBeach.com - www.OCPropertyNews.com - www.CostaMesaLive.com - www.Irvine-homevalues.com - www.NewportCoastLive.com - www.CoastLivinghomes.com - www.IrvineBestValues.com - www.OCHomeValueGuide.com - www.LiveAtIrvine.com - www.ExploreOCHomes.com - www.LiveAtOrangeCounty.com