Would Deduction Shift Sink Home Prices?

Home prices could decline 15% and a typical homeowner could lose $20,000-$30,000 in home equity if the mortgage interest deduction were converted to a tax credit, according to the National Association of Realtors.Speaking at the opening session of the 2005 Realtors Conference & Expo in San Francisco, NAR president Al Mansell noted that the White House tax reform panel is considering such a proposal. "Housing is the engine that drives this economy, and to even mention reducing the tax benefits of homeownership could endanger property values," Mr. Mansell said. "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. It should not be targeted for change." The NAR cited Internal Revenue Service data indicating that 52% of families who claimed the mortgage deduction in 2003 had incomes between $60,000 and $200,000. The association can be found online at http://www.realtor.org.