2 Homeownership Tax Deductions Disappearing This Year

As Realtors, we are advocates for home ownership, by definition. It's in our pledge:

"To protect the individual right of real estate ownership
and to widen the opportunity to enjoy it"

Many of us contribute personal funds (not tax-deductible) to fund grassroots campaigns designed to alert our membership and the public about issues in our nation and individual states that threaten these principles by affecting the affordability of real estate, myself included.

Yet in these economic times, "everything is on the table." Here are two items that will affect you personally come tax time next year, if they are not renewed. 

Have a look at your taxes from this year and the mortgage insurance premium write-off you were able to take, if eligible. Think it's no big deal now?

See the article at Houselogic, here. The Houselogic website is brought to you by the National Association of Realtors.

Get the REAL Facts on Mortgage Interest Deductions in Idaho

Interesting reading from the Ada County Association of REALTORS®.

Of the approximately 399,498 owner-occupied houses in Idaho in 2009, 278,102 or 70% had a mortgage.
In 2008, 194,063 taxpayers in Idaho claimed a deduction for mortgage interest. The total amount deducted was $2,054,503,000. This means that the average taxpayer claiming the MID deducted $10,587 from taxable income in 2008.

At a marginal rate of 25 percent¹, this means that the average taxpayer saved $2,647 in taxes as a result of the MID. The total tax savings from the MID in Idaho in 2008 was $513,625,750.

In 2008, 209,237 taxpayers in Idaho claimed a deduction for real estate taxes. The total amount deducted was $428,709,000. This means that the average taxpayer claiming the real estate tax deduction subtracted $2,049 from taxable income in 2008.

At a marginal rate of 25 percent², this means that the average taxpayer saved $512 in taxes as a result of the real estate tax deduction. The total savings from the real estate tax deduction in Idaho in 2008 was $107,177,250.

If the MID and real estate tax deductions were eliminated, the loss would not be a one-year event; homeowners lose out on these potential savings each and every year. The present value³ of these lost savings could total $12,416,060,000. The value of all owner-occupied real estate in Idaho in 2009 was $87,262,337,900. If the lost tax savings are fully capitalized into the price of houses, the average decline in value in Idaho would be 14%. From the individual perspective, the median priced home in Idaho in the third quarter 2010 was $127,600. A decline in value as projected would mean a loss in home value of $18,155 for the typical home owner.

--------------------------------------------------------------------------------
1 Marginal rates range from 10 to 35 percent.
2 Ibid.
3Present value calculation assumes 5 percent discount rate and 1000 year time horizon.

Sources for the data above include: Internal Revenue Service 2008, American Community Survey 2009, National Association of Realtors® 2010; All calculations are by the National Association of Realtors® Research Division

Published Dec 22, 2010. Reprinted with permission from Ada County Assoication of REALTORS®.