What are Americans Saying about Scrapping the Mortgage Deduction?

One of the main advantages cited by Americans when discussing the benefits of owning a home in the US is the tax break that they receive for the interest on their mortgage. In fact, many American homeowners think that the mortgage deduction is such an advantage that they will often choose to pay on their mortgage for several years even if they can pay it off sooner so they can keep receiving that tax deduction. But there have been rumors in Congress and around the country that the mortgage deduction may be disappearing in the near future and this has many people upset.

Currently, homeowners in the United States can deduct the interest on their mortgage up to a mortgage value of $1.1 million. Economists, however, have criticized this deduction for several years saying that it is unfair to non-homeowners. But since it is such a huge part of the tax code and it would be unpopular for a legislator to try to change it, the mortgage deduction is still around. That could change, however, in the near future as the national deficit is at a record high and the housing bubble has changed the way Americans look at the mortgage industry.

Reuters recently conducted a survey to find out what the average American thought about doing away with the mortgage deduction or even just changing it. About half of those surveyed were in favor of keeping the mortgage deduction the way it is. The other half said that there needed to be some changes made to the guidelines, such as putting a lower cap on the maximum amount that can be deducted, making a few changes to the regulations or simply eliminating the mortgage deduction all together.

Monica Luck, a 46 year old homeowner in the Atlanta suburb of Chamblee, says that taking away the mortgage deduction would be “unfair” to the homeowners who have put money into their homes and fixed them up. In her view, it would be a “big, fat tax increase” and she would be “furious” if the mortgage deduction was ended. Randall Ringer, the co-founder of Verse Group in New York, feels the same way. He remembers when student loans were tax deductible so he used them to pay for his education. After graduation, though, the tax deduction was eliminated and it “felt like a bait-and-switch scheme” he said. He went on to say that this situation sounds like the same kind of thing.

On the other side of the spectrum, Scott Peterson, a 56 year old homeowner in Virginia, said he would support changing the mortgage deduction for the greater good. If it would benefit the nation and help it with its financial mess, he would like to see the changes made. He says that “we all have to chip in” to help the country get back on financial track and this would just be one step to help make that happen.

What do you think about ending or even just changing the mortgage tax deduction? Is it something that could benefit the nation financially? Or do you think it would be more of a hit to the economy?