Is a Mortgage Deduction Disappearing Soon?

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NEW YORK (BankingMyWay) — The president’s deficit reduction plan aims to take a healthy chunk out of the popular mortgage interest deduction, a move that taxpayers are already rebelling against.

Gallup has released a study stating that 60% of Americans don’t want the government messing with their mortgage tax deduction for any reason - $14 trillion in U.S. debt or not - and housing industry groups are lining up right alongside taxpayers in expressing their opposition to Obama’s deficit plan.

Under the plan, taxpayers in the 33% and 35% tax brackets would only be able to deduct a portion of their mortgage interest on their tax returns. In general, the deduction limits would only impact taxpayers with incomes of $250,000 or higher, but other government deficit reduction plans, including the President’s own deficit commission’s blueprint, call for broader cuts to the popular mortgage interest deduction.

Housing groups, a powerful lobbying force in Washington, are standing firm.

"We will oppose any limit," says Jerry Howard, chief executive of the National Association of Home Builders. "This is an attack on the middle class."

“This deduction has been in force for 100 years and is a benefit for homeowners across the nation,” adds Moe Veissi, president-elect of the National Association of Realtors. “Seventy-five million Americans own homes and pay over 90% of the federal income tax – out of 300 million Americans, overall.”

NAR is taking matters into its own hands, offering a form letter on its website that can be sent by consumers directly to the offices of their elected Congressional representatives.

Congress won’t likely mess with one of its bread and butter campaign contributors; the housing industry lobby reportedly sent $17.6 million  to Capitol Hill in the form of campaign contributions in 2010, according to the Center for Responsive Politics.

With that kind of money on the table, Congress may have two words for President Obama – and for anyone with a deficit reduction plan that leans on the mortgage interest deduction – fat chance.

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