A proposal by President Bush's Advisory Panel on Tax Reform to abolish the Mortgage Interest Deduction for homeowners in favor of tax credits drew sharp criticism by Realtor Associations when it was introduced on Tuesday.
Adopting the recommendations could have dramatic consequences for local housing markets, warned Willi Krauss, president of the Silicon Valley Association of Realtors (SILVAR). Her local trade organization represents over 4,000 real estate professionals in Silicon Valley and on the Mid-Peninsula.
"Housing is the engine that drives our economy, and the very mention of changing a century long commitment to homeownership incentives is startling," said Ms. Krauss.
"The tax deductibility of interest paid on mortgages is both a powerful incentive for homeownership and one of the simplest provisions in the tax code. Why would anyone want to change it?" The mortgage interest deduction has been part of U.S. tax policy since the federal tax code was first enacted in 1913.
Melanie Hildebrand, president of the San Mateo County Association of Realtors (SAMCAR), agreed. "This proposal threatens home ownership in the Bay Area," said Ms. Hildebrand. The panel has recommended the replacement of the home mortgage interest deduction with a 15 percent credit for mortgage interest paid annually. For homeowners who currently deduct mortgage interest, the transition from the deduction to the credit would be phased in over a 5-year period. The credit would be capped at adjusted Federal Housing Administration loan limits, estimated to be $411,704.
SAMCAR represents more than 3,600 real estate professionals on the Northern Peninsula.
"For over 100 years, Realtors have worked to keep the American Dream of homeownership affordable for those upon whose hard work our economy is based," said Janet Case, CEO. "We need more incentives for housing, not fewer, especially here in our area. Our San Mateo County and Silicon Valley Realtor associations, along with the state and national Realtor Associations, will fight strenuously on behalf of all homebuyers and homeowners against this effort to abolish the mortgage interest deduction."
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.