June 26, 2017
(updated June 27, 2016)
Premier Properties is a leading full-service residential and commercial real estate company that in 2017 is celebrating 30 years in business.
We have offices in Easton, Raynham, and Martha’s Vineyard. The primary – but not exclusive – geographic area in which we work is is one that takes in Metropolitan Boston and extends over Southeastern Massachusetts and across Cape Cod and the Islands.
Our 40 licensed agents care deeply about their vocation, are highly knowledgeable about their vocation, and handle each and every purchase and sale with personalized and customized attention and service.
It provides Premier Properties immense gratification, and we find it immensely heartening, that we are now helping, with their first home purchases, the sons and daughters of our early clients.
Here in this space we discuss the business of real estate, and matters related … sometimes distantly related … to real estate.
Today we discuss a topic and issue that is central to real estate and individual and family finances: the mortgage interest deduction (MD).
The mortgage interest deduction is a bedrock of American personal and family finance and investing.
Forces that lobby and advocate for the MD on the federal and state level are well financed, well motivated, and well organized.
Investopedia provides the following definition of the mortgage interest deduction:
“A common itemized deduction that allows homeowners to deduct the interest they pay on any loan used to build, purchase or make improvements upon their residence. The mortgage interest deduction can also be taken on loans for second homes and vacation residences with certain limitations. The amount of deductible mortgage interest is reported each year by the mortgage company on Form 1098. This deduction is offered as an incentive for homeowners.”
Here is more information that Investopedia offers on the MD:
“Home Mortgage Interest is reported on Schedule A of the 1040. Mortgage interest paid on rental properties is also deductible, but this is reported on Schedule E. Home Mortgage Interest is quite often the single itemized deduction that allows many taxpayers to itemize; without this deduction, the remaining itemized deductions would not exceed the standard deduction. Interest from Home Equity loans also qualifies as Home Mortgages Interest.”
There is a lot of talk in public and the media about what impact the Trump administration’s tax plan may have on the MD. One aspect of the plan would raise from $322,000 to $608,000 the home loan mortgage balance you carry in order for it to make sense to take the deduction.
So does this mean that wealthy homeowners will receive most of the benefit under this plan – as opposed to the middle class? Well, in terms of overall tax relief, maybe – and maybe not. Broad considerations apply. That is, take a look at the entire tax package.
Here is an explanation about the Trump plan and its “Mortgage Tax Break” included in a May 16 story in Bloomberg, written by Prashant Gopal and Paul Light:
“Americans filing their taxes can either subtract a fixed amount from their incomes, called the standard deduction, or itemize write-offs, including mortgage interest as well as state and local taxes. The administration wants to raise the standard allowance — to $24,000 from $12,700 for a married couple filing jointly — and allow deductions for only home loans and charitable donations, greatly reducing the chances that itemizing would pay off for average taxpayers.”
Please click here to be taken to the full Bloomberg story, titled “25 Million Americans Could Find Mortgage Tax Break Useless Under Trump’s Plan.”
Premier Properties also recommends a smart and insightful newspaper story about the MD and the Trump administration’s tax plan written Tom Kelly, the former real estate editor for the Seattle Times, and syndicated columnist and talk-show host.
Please click here to be taken to Mr. Kelly’s story, titled, “Mortgage interest deduction: Fewer than expected take it,” published in the June 22 at Akron.com.
What next for the mortgage interest deduction?
Premier Properties believes that it will remain in place – and not be changed considerably.