i’m not a political activist, but have you heard about bush’s tax panel’s recommendations to reduce the benefits of owning real estate? this is a must read for all homeowners and investors. i suggest you write your representatives and make your voice heard:

Tax Panel Could Shrink Mortgage Benefit By MARY DALRYMPLE, AP Tax Writer
Sat Nov 5, 8:08 AM ET

WASHINGTON - That most sacred of tax breaks, the mortgage interest deduction that has helped millions buy homes, could vanish if President Bush and Congress follow the recommendations of his tax advisory board.

Nine tax experts, tasked with developing simpler and fairer tax laws, concluded that the deduction does more for wealthier taxpayers than for people struggling to buy a home. But mortgage bankers and real estate agents see irreparable harm if the tax break disappears.

The National Association of Realtors estimated that housing prices could decline 15 percent, bad news for owners who have seen the value of their homes increase.

“You’re going to be taking away from Middle America,” said David Lereah, the association’s chief economist. “Everyone, whether you use the mortgage interest deduction or not, the value goes down. You’ve just reduced the retirement nest egg for everyone.”

The idea is a long way from becoming reality, and several lawmakers have already declared their opposition.

The current tax break lets homeowners deduct interest paid during the year on a mortgage up to $1 million and a home equity loan worth up to $100,000. Homeowners also benefit from breaks that let taxpayers deduct state and local property taxes from the federal bill.

Almost 36 million taxpayers claimed the deduction in 2003, according to the most recent statistics compiled by the Internal Revenue Service.

The President’s Advisory Panel on Federal Tax Reform urged the administration to do away with the deduction and replace it with a credit worth 15 percent of interest paid during the year. They would scrap the deduction for property taxes, too.

If enacted, mortgages eligible for the tax break would be limited by a formula reflecting the average regional price of housing. If in place today, that range would spread from $227,000 to $412,000. Mortgages for second homes and interest paid on home equity loans would not be eligible for the credit.

Taxpayers who currently own homes would have five years before they had to use the new credit. During that period of transition, a taxpayer could still take a deduction but the size of the mortgage eligible for a tax break would gradually fall. At the end of five years, everyone would be using the proposed credit.

Connie Mack, a former Florida senator and chairman of the tax panel, said less than 5 percent of mortgages in the nation exceed the proposed cap. “It is a fair plan. It shares the benefits,” he said.

For homeowners with a small mortgage who don’t itemize their deductions, the credit means a new tax benefit defraying the cost of housing.

Sheila Crowley, president of the National Low Income Housing Coalition, said it’s time policymakers rethink a housing subsidy for people who don’t need it.

“Changing it isn’t going to decrease homeownership,” she said. “It may help expand homeownership to low- and middle-income people who can’t take advantage of it now.”

Taxpayers who bought $1 million homes expecting a generous tax break could be in for a shock, said Michael Fratanponi, senior director of single family research and economics at the Mortgage Bankers Association.

“That’s going to really bite,” he said.

Greg McBride, senior financial analyst at Bankrate.com, said the proposed credit won’t help homeowners in regions of the country, like New York and California, where housing prices have skyrocketed.

“It seems to ignore the plight of a first-time buyer in an expensive market,” he said.

Because the panel would convert the deduction to a credit, taxpayers who pay income tax at marginal rates over 15 percent will see their benefits shrink.

Clint Stretch, director of tax policy for Deloitte Tax, calculated that housing gets more expensive, for example, for a family carrying a $500,000 mortgage and earning income in the 25 percent tax bracket. The proposal would take away $4,400 of the tax benefit.

Stretch said the shock might be as much psychological as financial.

“It also has a piece of American dream about it,” he said. “It’s not just what people get now, but what they hope and dream they’re going to have someday. I think a lot of taxpayers who would never have a mortgage above the (limits) sure hope they would.”


On the Net:

President’s Advisory Panel on Federal Tax Reform: http://www.taxreformpanel.gov

I saw that on CNN last night as well!

The good news is at this point it is just a proposal. On the other hand Ohio is correct CALL your local representative.

Ehhhh. It’s really only a problem for blue states. ;D
The goverment could definatly use some more tax dollars…after all, we are taking a real beating on our “Iraqi RE holdings”. ::slight_smile:

If it starts in Blue States it will soon spread to every state don’t you think?

Wasn’t this country founded to get away from taxes in the first place?

weren’t taxes only supposed to last for four years?

Don’t get me wrong I am a tax paying citizen but when is time to say enough?

While other businesses get better tax breaks to out source there business to India and other countries I should bite the bullet because I invest in homes in America?

Sorry just my red white and blue lovin REDNECK attitude!

greaaaaaaaaaaaaaat figures that as soon as I begin President Bush is trying to push something that can take chances of making money away from us.

The goverment could definatly use some more tax dollars...after all, we are taking a real beating on our "Iraqi RE holdings".

Have we not paid enough to make this another State? Then we all could start buying up properties! Wow beachfront property without the beach! ;D

the really idiotic part of this proposal is that the panel believes that in some way slashing nationwide real estate values by 15% would somehow help the economy or those in the lower classes.

it’s amazing that these “experts” probably have the best possible financial degrees available, and still lack any discernable common sense. WOW.

I just hope the investments I make wont be affected by this. What aspects of buying/selling woudl this effect? Renting? Wholesaling? Rehab? All?


First, I can’t believe that you live in NY and cry about potentially higher taxes!

Second, the President doesn’t make Tax Laws…Congress does. The tax system is broke. Period. Paragraph. Clinton promised to fix that but we know where his focus was…the President convened a panel to make recommendations but the tax revision will come off of Capitol Hill, not off of Pennsylvania Avenue.

Third, I can’t believe that you would critize any politicians – your two Senators are the worst of the “Tax and Spends”!


Haha lets leave the political arguments outta this…We all know bush is the king of real estate, except he doesnt have to pay for it. He uses Other Peoples Money(ours) to forcefully evict the tenants.

Just thought i’d make it relative :wink:


Ahhh…the leopard shows its true spots…

No surprise though…explains a lot.

I think somebody is a card carying republican.

Ha I am a strong democrat and am glad the tide is about to change being the Republicans in our administration and beyond are failing everyday.

“Denny Crane…Pop Goes the Weasel…Denny Crane…Who’s your Daddy?”

…and, actually jp…your description doesn’t really describe you.

Keith and Robb for Co-Presidents we can turn it around!! what do you think Keith!

LOL. Blue State. Red State…Whatever.
I’m a fascist so I hope they both fail so I have my chance to rule with an iron fist. ::slight_smile:

<<Keith and Robb for Co-Presidents we can turn it around!! what do you think Keith! >>

Nah Robb…9 years at the White House and 2 years at the House of Reps was enough for me…I moved to LA (the state, not the cesspool!) to get away from the politicos and the crazies…



Don’t worry, as a Democrat I’m sure that you’re ENTITLED to be a successful REI. Even if you do fail, it won’t be your fault - YOU ARE A VICTIM! I’d sue somebody!


haha oh god.


I’m Canadian buddy. 8)