According to CAR, such a measure “makes a substantial difference” especially for lower- and middle-income families in states like California where home prices have already started to pick up.
If legislators terminate the deduction, argues CAR president Don Faught in a letter (view the open letter) sent to Congress, President Obama and to California’s six largest newspapers as an open letter advertisement, “more than 694,000 California households would no longer be able to afford to buy a median-priced home.”
Judging from current discussions about fiscal cliff-related measures, legislators may reduce the mortgage interest deduction limit to $500,000 for a primary residence and eliminating it entirely for second homes, the letter notes.
“Any proposal that eliminates or attempts to alter in any way the mortgage interest deduction,” Faught warns, ultimately undermines a century-old commitment to homeownership and would cost the average California taxpayer $3,940 annually.
CAR maintains that data indicate the matter is important to most borrowers.
According to a recent CAR survey, 79% of homebuyers said that mortgage interest and property tax deductions were “extremely important” in their decision to purchase a home because they play an important role in monthly budgeting and housing affordability.