Will Congress Swipe Your Next Tax Savings? Maybe.

Like powerful wizards with the potential to zap money from our pockets,  Congress – which is searching high and low for cash seeing as they’ve got very little to work with at the moment – is considering helping themselves to a stash that’s always been reserved for us homeowners. Yes, they’re thinking of taking money from our pockets.  

See, most of us when buying a home borrow the bulk of the money we’ll need – that’s a mortgage loan, of course. Then, month by month, we pay that loan back with interst. At the beginning of our loan repayment, the amount we pay back in interest is thicker than the amount we pay for principal.

But that’s okay!!! We never minded, you know, because we’ve always been allowed to subtract a portion of those payments from our tax bill. So, if we were in the 25 percent tax bracket, we could lower our tax bill by 25 cents for every dollar we paid in mortgage intrest. It’s a neat little thing called the “mortage tax credit OR DEDICTUON” it’s exactly what makes buying a home such a financially good idea. Without it, our taxes be higher and we’d have to pay rent.

Well, those high tax days could arrive after all, warns Office Economist Robert Dietz, who works with the National Association of Home Builders, if there’s a push to get Congress to swipe that tax credit. They’d and put in it’s place a flat 12 percent deduction. That means for every dollar you spend in morgage interest, you’d get just 12-cents back.

“There are winners and losers,” says Dietz, “And this would most likely hurt the younger home-buyer but help the older people who have little to no mortgages. Then there’s the other problem: it will put a downward pressure on home prices.”

Essentially adding insult to injury.