Government Affairs Talking Points: Preserve the Mortgage Interest Deduction (MID)

Congressional Action Needed: 

Retain current law as it applies to the Mortgage Interest Deduction (MID).

House Actions to Date:

No activity related to MID.

Senate Actions to Date:

No activity related to MID.

What to Tell Your Representatives and Senators:

• Any proposals that would reduce or limit the MID would undermine consumer confidence in the housing market at a time when the goal is to stabilize housing prices and sustain homeownership.
  
  
• Now is not the time to change the MID.

Issue Background:

The Administration’s FY 2010 Budget recommendations included a proposal that would limit the MID by limiting its value for taxpayers with more than $250,000 ($200,000 for singles) of adjusted gross income.  In practical economic effect, the proposal would change the deduction to a 28% tax credit. 

• The MID was included in the original 1913 income tax provisions.
  The MID is deeply embedded in both the minds of consumers and the value of their homes.  Its inclusion in the original provisions of the tax laws underscores the well-established understanding of the importance of homeownership. 
  
  
• Reducing the value of the MID for any group of taxpayers has a negative ripple effect on all potential purchasers.
  REALTORS® have reported that publicity about the Administration’s proposal made some potential buyers reluctant to make purchases because they feared that they might lose the MID associated with the transaction.  This uncertainty weakens an already weak market.
  
  
• The MID is among the simplest provisions in today’s tax code.
  Individuals who itemize their deductions simply transfer information that their lenders provide on Form 1098 to their Form 1040.  Lenders provide accurate and timely data to both the borrower and to the IRS, so there are no “games” associated with the MID.
  
  
• Any action that has a chilling effect on consumers is particularly ill-advised in today’s housing market.
  Stabilizing housing prices should be the primary goal of all tax policy related to homeownership.

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