The issue on limiting mortgage interest deduction was raised during the height of the electorial debates; the elephant and the donkey had different views. Nevertheless, the reduction is estimated to cost almost half a trillion spread out in a duration of five fiscal years. How would this topic change your ability to buy a house in DC?
The estimates are quite significant, according to a report from the Congressional Joint Committee on Taxation: $ 484.1 billion from fiscal year 2010 to 2014. The write-offs for local and state land tax alone will total to $ 120.9 billion. Obama and Romney readied separate proposals to limit mortgage reduction, and provided these at the time of the election debates. The fate of the housing industry hinges on who gets to sit in the Oval Office.
Chief economist Jed Kolko of real estate watch Truila.com gave several ideas. As Romney suggested, the $ 25,000 limit on itemized deductions will probably have an effect on those with an income range of $ 50,000 to $ 200,000 annually . Romney is certain that losses in deductions will pay off because of lower payments based on reduced marginal rates.
For his part, President Obama supported a cutback in real estate write-offs and various others for folks who earn more than $ 250,000 a year, putting the cap at 28 percent. It is part of his general scheme to increase taxes for high-income earners, with those on the said range maybe seeing an standard growth of $ 500 per return. Cuts in other fields could be substituted with his recommendation.
Yet, according to analysts, both proposals only affects a small proportion of American taxpayers. It's still unclear as of this point who had the better plan, let alone how each candidate's stance on the issue affected the outcome of the election. Yet, irrespective of how the election had resulted in, there will clearly be changes in the way you could buy a house in DC or in other cities. But for some reason, the cost of limits for mortgage deduction needs to go down.
For more on the topic, you can read the piece at the Washington Post's website at WashingtonPost.com. Kolko also offers a detailed analysis on capping itemized deductions at pro.truilablog.com.
Here's What you should know when you buy a House in DC