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Home Front: Politix
Goodbye Home Loan Interest Deduction: Home Builders Will Oppose Republican Tax Bill
2017-10-29
[WSJ] WASHINGTON‐An influential home builders group will oppose the House Republicans’ forthcoming tax bill, in a blow to the party’s attempt to forge unity among business sectors.

The National Association of Home Builders, which had expressed openness to changes in the mortgage-interest deduction, decided it couldn’t back the GOP bill. The association’s leaders made the decision after top Republicans told them this weekend that they wouldn’t replace deductions for mortgage interest and property taxes with a new tax credit.

Instead, the bill will retain an itemized deduction for property taxes, the House Ways and Means Committee said late Saturday. That is a concession to lawmakers from high-tax states such as New York and New Jersey.

"It’s a bad bill for the housing sector," Jerry Howard, CEO of the builders group, said in an interview on Saturday. "We will not be for it."

House Republicans plan to release their tax bill on Wednesday. The tax legislation is the centerpiece of the GOP’s economic and political agenda, and many details have been closely guarded as lawmakers try to build a coalition to push it through the House before Thanksgiving.
Posted by:Besoeker

#17  The sole long-term effect of this subsidy is to push up loan values which tends to help the bondholders of banks.
Posted by: Bright Pebbles   2017-10-29 17:23  

#16  Maybe compromise and phase it out over 20 years. This tax just perverts the market.
Posted by: gorb   2017-10-29 16:46  

#15  It's not quite true that removing the mortgage interest deduction only helps the upper-upper middle class and wealthy.

People who've had to remortgage modest homes in order to cover healthcare for loved ones could be hit hard with this shift. A combination of higher interest rates / having to pay mortgage payments on a house that could have been paid off earlier, plus seriously onerous medical bills, could easily exceed what a $24k standard deduction would mean for them. Net = negative impact on such families.

It's true that someone will be hit by any changes. But it's not true that this particular proposed change will only hurt mini-mansion owners.
Posted by: Albemarle Dingle5877   2017-10-29 16:38  

#14  This was an anti-capitalist subsidy.

Good for Trump to remove this most rentier of tax-breaks for the elite.
Posted by: Bright Pebbles   2017-10-29 15:17  

#13  Avg home price in San Diego County is $590K
Posted by: Frank G   2017-10-29 15:16  

#12  I've been watching these home builder for decades now and I have zero sympathy for them. Ask them how they feel about the sub prime mortgages that are still happening even after the 2008 mortgage meltdown. Yeah, you make the mortgages painless at the outset but increasingly painful and the mortgagee gets deeper into it. But with no money down required it's no surprise that home prices skyrocket. Well, you can imagine how the home builders feel about that. They pocket the money and when the house of cards falls the taxpayers get stuck with the bailout. Housing prices fall when all those houses go into foreclosure and it's really funny then to listen to the developers and politicians. who've been screaming for decades about how we need more affordable housing, talk about how we need to get housing prices back up where they were. Two faced sons of bitches. But you know damn well the politicians will give home builders what they want because home builders give the politicians what they want.
Posted by: Abu Uluque   2017-10-29 14:59  

#11  The thing that infuriates me is all this tax cut talk and not one bit of talk from Congress about decreaasing the size of the federal government. If you do not do that, it will be bankrupt and insolvent and collapse. Congress has all the authority to spend but no fiduciary responsibility. This is a recipe for disaster.
Posted by: Alaska Paul   2017-10-29 14:34  

#10  The bill also increases the standard deduction for $12K to $24K. So this only hurts people with interest and property tax in excess of $12K. That's the upper middle class, not the middle class.

We over invest in housing because of this federal subsidy. It's one reason housing costs more than it should. The same thing is true of medical costs. The primary cause of high medical costs is the deductibility of health insurance premiums for companies.

Every time the government intervenes in markets to try to "help" someone, it ends up creating distortions that hurt society overall.

The sixteenth amendment should be repealed and the federal government should go back to excise taxes and a sales tax.
Posted by: Heriberto Lover of the Hatfields1923   2017-10-29 14:28  

#9  When you are about to go bust you increase income and/or reduce spending. These lizards arent taking a pay cut. So they will take more from the middle class.
Posted by: Threatch Jeamp8135   2017-10-29 13:56  

#8  So the roughly 100% increase in the standard deduction wouldn't offset this? (unless you're into buying starter castles or taking 60-year notes)

Schedule A also covers charitable deductions, state and local taxes paid (also on the block), employment expenses plus a couple more. Didn't pull one up to look.
Posted by: Mullah Richard   2017-10-29 12:50  

#7  Simplification always works best. Interest deduction was an incentive to borrow money and make housing more affordable; however, with all these type of short term solutions that turn into status quo the market prices adjust (both on loans and home prices). The benefit to home buyers is minimal today and the cost to taxpayers not taking the deduction is unfair. Get rid of the deduction and maybe more people will payoff their mortgage.
Posted by: Airandee    2017-10-29 12:45  

#6  That last comment was me.
Posted by: Raj   2017-10-29 12:38  

#5  If there's no mortgage interest deduction, about half of the people who itemize deductions (on Schedule A) will no longer be able to itemize. This is what happens when tax weenies decide they have to 'pay for' tax cuts elsewhere.
Posted by:    2017-10-29 12:38  

#4  Instead, the bill will retain an itemized deduction for property taxes, the House Ways and Means Committee said late Saturday. That is a concession to lawmakers from high-tax states such as New York and New Jersey.

Texas doesn't have an income tax, but does have a hefty property tax. So its just not New York or New Jersey.
Posted by: Procopius2k   2017-10-29 12:05  

#3  Why should people in modest income red states subsidize the mortgages of million dollar homes in San Francisco or New York City?

"It’s a bad bill for the housing sector,"

No, its bad for the realty business' ever speculating home prices upward. Ah, poor baby. Those who can adjust by making more affordable housing won't see a slump. Which means those HGTV homes won't be what will constitute the largest selling market.
Posted by: Procopius2k   2017-10-29 12:03  

#2  It's all 'needs based.' If you're privileged wealthy enough to own your own home, you have no 'need' for a tax break on the home loan interest.

If you were naive enough to believe Fred Thompson and Tom Selleck's pitch on Reserve Mortgages, you surely won't mind paying taxes on loan interest.

[sarc off]
Posted by: Besoeker   2017-10-29 11:53  

#1  The third possibility, if they choose to make this the hill they die on, is to reduce the deduction or remove it altogether -- the Democrats in the House mostly come from those high tax states.
Posted by: trailing wife   2017-10-29 11:42  

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