Saturday, June 21, 2014

Danger Danger Will Robinson - Housing Stock to Be Devastated

Originally published on Passive Activities and Other Oxymorons on March 17th, 2011.
So one rule that I have for the blog is to not comment on tax policy.  The PAOO Prime Directive is "It is what it is. Deal with it."  I violate the rule about as often as Captain Kirk used to violate the Federation's Prime Directive, roughly every other week or so.  Here is a new rule.  If somebody asks me nicely to write about something in my blog, I will, particularly if they ask me nicely twice.  I've decided that this rule overrides the Prime Directive.  Let's call it the Super Prime Directive.

So here is the very nice email I just received:

Hello Peter

I sent you an email last week and didn't hear back so I wanted to follow up. Congress and the Administration are looking into scaling back or eliminating the Mortgage Interest Deduction. The consequences would be devastating to the recovering housing market and the tens of millions of home owners who benefit from the deduction.
The House recently introduced a resolution to retain the mortgage interest deduction and I hope that you’ll help spread awareness about it on Passive Activities and Other Oxymorons. We created to support this initiative and I've also created a useful site for bloggers and journalists to borrow resources from:

Please let me know if you have any questions or need more information. If you are able to post about this, I'd love to get the link and share it with my team.

Thank you,

Ruth Potter

You should check out the website.  It has some really nice pictures and is very well done.  The gist of the site is in the text over a picture of a lovely home with an American flag on it:

The mortgage interest deduction is at risk of being terminated.  The consequences would be devastating to home owners, the housing market and the nation's economy.

Being self absorbed and also because it was easy, I recomputed my 2009 tax return without the home mortgage deduction.  It would have cost me $2,075.  I'll call it forty bucks a week to be accurate, but not precise.  I suppose I could stop buying Mountain Dew and a chocolate frosted donut every morning.  Most likely though, it would mean my kids will inherit a little less or that I will run out of money when I am 94 instead of 96.  Then I tried to think how bad could it possibly be for somebody else.  Because of the limitation on the balance of a mortgage that can create a deduction you are not going to see many mortgage interest deductions north of $50,000.  To keep the math simple I'm going to say losing that deduction might cost somebody $20,000.  Now that's a lot of money.  Of course I have a hard time with the idea of spending more than $1,000,000 on a house.  If the deduction is going to make the difference maybe you should be shopping for a starter home in the $500,000 range.  I know.  It's easy for me to say not living in Silicon Valley.

I'm sorry that given that someone has nicely asked me to write about something that I can't quite share their passion.  Check out their website and see what you think though.  And if you want me to write about something all you have to do is ask.  Agreeing with you will cost extra.

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