Realtor Magazine sends out email with their take on the news, and on legislation. This month they are in an uproar about something they found in the Budget proposed by President Obama, and they intend to fight! At first, with the headlines they used, and the words they led off with, I was getting excited right along with them. Then I really read the article. Huh… here I am again, out of step, because I think they are making a mountain out of a mole hill. Maybe to prove that they are watching out for us? I don’t know, but I think they are not helping.
Here is what they are excited about. You may agree with them, but I don’t. The Headline is: Mortgage Deduction at Risk in U.S. Budget. Well, that got my attention, because like everyone else who is a homeowner, I like my deduction, and I want to keep using it. As a real estate agent I like to point out to first time buyers the benefit of owning a home — tax deductions. However, this headline is deceptive. They start off as if all our mortgage deductions are at risk, but this is not true. It is only those who earn more than a quarter million dollars a year who could see their deductions reduced — they still get deductions, just not as much as before.
As currently drafted, the plan changes the Mortgage Interest Deduction by reducing the amount of mortgage deductibility on families earning over $250,000. This proposed change in the Mortgage Interest Deduction will result in further erosion of home prices and home values. If this proposal is enacted it will set off a new round of price depreciation, will cause greater distress on the balance sheets of banks as the collateral value of mortgage backed securities declines. A second credit crisis could emerge before the first one is resolved. (Link to article)
Frankly those few thousand families spread across our whole nation who will be affected by this part of the plan live in the kind of homes and neighborhoods (do they live in neighborhoods???) that have no affect on most of us. They live in their castles and mansions, (or maybe seven homes) and this kind of housing is way out of the league of most of us. I also don’t think that reducing the tax deduction on these people has any effect on price depreciation for most homes, especially for the average home. The number affected by this law is a very small percentage of homes and people. Of course, if you are catering to the wealthy elite, (or hoping to cater to them) I guess you will really care about this. I tend to work with regular folks who have small businesses, or who are doctors, lawyers, nurses, teachers, or just work for someone else, like working for the Federal prison in our area, or at one of our casinos. I don’t have clients who belong to that upper class. (Of course, if Bill and Melinda Gates show up and want to buy something through our office — hey I’ll work with them!) This is one campaign I’m not interested in supporting. I don’t think people making that much money will be hurt at all by having their deductions reduced, and this change will put a little bit more money into the common income for the country, and we need that income to reduce our debt. The lifestyles of the rich and famous will not be affected in the slightest.
On the other hand the email message included a link to another article that is about the ARRA (stimulus) bill that was passed recently. This article is very helpful. I like the way it summarizes the First Time Home Buyers’ credit, for example:
The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser’s income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
The article goes through a whole list of the ways real estate and housing is affected by the bill. Makes for a good read, and is worth keeping on hand.
In the meantime we are having another cool, but lovely day here in Mason County. The sun is shining! It’s a good day to view property. Remember to check out the featured home on this site.
