JACKSONVILLE, Fla. -- As Congress looks for new revenue to avoid the so-called fiscal cliff, what was once considered a popular off-limits tax break is now getting a second look.
The mortgage interest tax break is now on the table as the Obama administration and Republicans look for more tax revenue. The deductions can be taken for interest on mortgages up to 1 million dollars for a first or second home.
Discussions in Washington center on some type of cap on all deductions. One idea floating around is to cap qualifying mortgages at $500,000 and eliminate the deduction for second homes and home equity loans.
Local real estate agent, Jon Singleton of Watson Realty, says any elimination of a deduction would damage a fragile economy and cause home prices to drop. "It does play into people's ability to participate in the American Dream. But of those 65%-67% of those Americans who are homeowners, it really does affect their everyday life. It's several thousands of dollars a year for pretty much anybody," says Singleton.
The folks most likely to get hit the hardest by repealing the mortgage interest deduction are people who take out jumbo loans. Those are usually loans over $417,000.
First Coast News