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Originally Posted by JCL
Interesting perspective. I do think that mortgage interest in the US will eventually be eliminated as a deduction. There aren't many countries that let you deduct personal loans, this deduction is a significant exception. I thought that incenting people to borrow money through tax credits was likely a contributor to people borrowing too much in the pursuit of bigger homes and more mortgage debt. Wasn't that household debt one of the problems that led to the current meltdown? Why should home mortgages be deductible unless you want to encourage more mortgage debt?
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What I have heard is that there are some supporters of decreasing mortgage interest deductions for homes over 3,000 sq.ft. and basically eliminating them on homes over about 4,200 sq.ft. for environmental reasons. They basically state that the larger homes have a bigger carbon footprint and should be punished.
The entire real estate industry is a huge part of our overall economy. I really don't think eliminating mortage interest deductions across the board is a good thing. The problem isn't with people wanting to be home owners. It is with the banks giving people who were not economically qualified to be "owners" in the first place a mortgage. Or getting them into a larger house than they could afford with ARM mortgages. This goes back to the loosened Fannie Mae requirements of the Clinton era, IMO.