The Debate Is On Over Whether To Eliminate The Mortgage Interest Income Tax Deduction

Lawmakers, industry groups, and taxpayers are hotly debating whether it is time to eliminate the mortgage interest income tax deduction. The deduction is very popular among home owners, but this post from the Wall Street Journal Blog: Developments takes a thoughtful look at both sides of the discussion.

Read the full story here: http://blogs.wsj.com/developments/2010/11/12/is-it-time-to-roll-back-the-mortgage-interest-deduction/

Nick Timiraos, the post's writer, points out that one proposal is to not eliminate the deduction entirely but to lower the maximum amount of the debt you can deduct interest on from $1 million to $500,000. It would also eliminate the deduction for home equity loans and lines and for second homes. While that's not going to be appealing to someone with a $1 million vacation property it could be comforting to someone with a $200,000 loan on their primary residence. Of course this is just one proposal - there will be lots of political manuvering before anything actually happens.

The post also discusses the objections of the National Association of Realtors, National Association of Home Builders, and others in the industry. They are extremely concerned about the effect eliminating this popular tax deduction would have on an already weakened housing market.