Owners of Palos Verdes real estate take advantage of the mortgage interest deduction to help offset their higher mortgage payments which is a result of the higher home prices in Palos Verdes. More than one client has been watching the federal governments discussions about the possibility of eliminating/reducing this deduction.
“Deduction’s deficit effect lowered – Homeowners are likely to write off less mortgage interest on taxes than anticipated” was the headline in a recent LA Times article by Kenneth R. Harney. The article goes on to state that according to a new report by the non-partisan Joint Committee on Taxation, the mortgage interest deduction will not be decreasing revenue by as much as originally estimated: “$88 billion less in revenue losses are now projected over the next three fiscal years – than the committee estimated early in 2010.”
There are several reasons for this reduction. Interest rates are at record lows and many existing homeowners have refinanced their mortgages to take advantage of the lower rates. Home prices are down resulting in lower purchase prices and smaller mortgages. There is also some repayment of the first-time home buyer credit programs. Let’s hope that this new report will make the mortgage interest deduction “less vulnerable to attack”. Click here to read the entire LA Times article.
