The President's bi-partisan commission on deficit reduction wants to cap the mortgage interest deduction at $500,000 — a 50% reduction from current tax rules, according to a proposal released late Wednesday afternoon.
The panel also seeks to eliminate the MID for second homes and home equity loans, moves that potentially will hurt an already weak housing market.
In total, the commission wants to eliminate $100 billion in tax breaks. As reported by National Mortgage News last month, cutting down the MID was widely anticipated by the industry as well as the National Association of Realtors, the latter of which is already lobbying against any changes to the deduction.
"Given the fragile state of the nation's housing market, now is not the time to be scaling back incentives for homeownership," the Mortgage Bankers Association said in a missive published just after the first draft of the commission's report came out Wednesday.
"The mortgage interest deduction is one of the pillars of our national housing policy, and limiting its use will have negative repercussions for consumers and home values up and down the housing chain," said MBA chairman Michael Berman.
