There's a hallowed rule in U.S. housing policy: If you own a home, you get a tax deduction on your mortgage interest.
But there's also a growing push to sacrifice this sacred cow, and the reasons are disparate. Some people argue that the policy should be changed because it doesn't really encourage homeownership like it's supposed to. Others say the government shouldn't be encouraging homeownership anyway. Some people say the government can't keep giving out such a big tax break when it's facing huge deficits. Others say the policy isn't giving enough of a tax break to lower-income families.
Despite the buzz, it will be difficult to revamp a tax deduction that's been in place for nearly a century. The housing industry's powerful lobby is sure to fight any proposal that it believes would discourage home-buying, particularly given the weakness of the housing market. Both Congress and the White House would have to approve any change to the tax code, but they could be reluctant to take on such a controversial issue before the 2012 presidential election.
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