Mortgage Interest Deduction May Disappear On Loans Over $500,000
November 20th, 2010 categories: Deborah's Scrapbook, Month to Month, Real Estate Forum
Presidential Commission recommending to reduce the $1,000,000 now allowed, to a maximum of $500,000.
The Federal Government is proposing that any homeowner with a new loan that is over $500,000, be only allowed to deduct the interest from their income tax up to a cap of $500,000. What this means is if you have a mortgage loan on a home for $750,000, you will not be allowed to take the interest deduction on the $250,000 balance, taking away one of the last remaining deductions for the upper income who itemize their tax deductions.
For More On How To Claim Home Mortgage Interest Deductions
“The mortgage interest deduction is one of the pillars of our national housing policy,” said Michael D. Berman, chairman of the Mortgage Bankers Association. The proposal wouldn’t affect the majority of mortgage loans, but it certainly would affect the resale of properties that are priced over $500,000, as the interest deduction incentive is a major reason why homeowners purchase high end, luxury properties. In addition, the draft also seeks to completely eliminate interest deductions on second homes and equity lines of credit.
To give you an idea of what this proposal could potentially affect, let’s take a look at the FMLS, which is the official real estate listing service for the 18 county Metro Atlanta area, which includes North Fulton, Milton and Alpharetta. There are currently over 32,000 homes listed under $500,000 and approximately 4,400 homes listed over $500,000, which is about 14% of the market.
To Search Georgia MLS Listings By Price, Interactive Map Or Foreclosure
As a RE/MAX Realtor, I have personally found that in the last couple of years, homes that are priced at $500,000 or less in the North Fulton, Milton, Alpharetta area are still turning fairly quickly. Home prices in the $750,000 range and up continue to fall in price and are definitely staying on the market longer. If you are looking for great value, you will find it in this higher price range, as homes that were once over $1,000,000 can be purchased with savings in the hundreds of thousands of dollars.
For More On The Limiting Mortgage Interest Deductions
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