NAR pushes to preserve homeownership tax benefits

The National Association of Realtors recently announced its support for the preservation of current homeownership tax benefits, in response to talks of reducing this tax deduction as a solution to the nation's debt crisis. The NAR said changes to the mortgage interest deduction now could prevent the housing market from stabilizing, hurt home prices and values, stall middle-class wealth accumulation and inhibit economic growth.

NAR chief economist Lawrence Yun said, "The MID facilitates homeownership by reducing the carrying costs of owning a home, and it makes a real difference to hardworking middle-class families."

According to Yun, eliminating the tax deduction will lower the homeownership rate, forcing homeowners, who already pay 80 to 90 percent of the U.S. federal income tax, to pay up to 95 percent. Of the people claiming the MID, 91 percent earn less than $200,000 a year, thus the proposed plan will increase taxes on the middle class and hurt small business, resulting in less job creation, according to Yun.

John Weicher, director of the Hudson Institute's Center for Housing and Financial Markets told Reuters, "It would put buyers at a disadvantage and create a new bias in the tax code that favors renting rather than owning your own home."

But analysts debate whether incentives for homeownership might bring about another housing bubble. Donald Marron, director of the Urban-Brookings Tax Policy Center, told Reuters that the American emphasis on homeownership encourages people to take on a substantial amount of mortgage debt. 

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