The Mortgage Interest Deduction is Under Attack

The Mortgage Interest Deduction is Under Attack

By Chad D. Collins, AB,CGP

2011 Regional Vice-President, North Carolina Home Builders Association


American voters have a clear message for Congress: “Don’t touch my mortgage interest deduction!” However, a recent draft proposal released by the co-chairs of the National Commission on Fiscal Responsibility and Reform (NCFRR) threatens this deduction that often provides thousands of dollars of tax savings each year to American home owners.

The NCFRR — a bipartisan commission created by President Obama to help address the nation’s budget deficit — recommends either eliminating the mortgage interest deduction altogether or severely limiting it among many other changes. This means many home owners could have a much higher tax debt each year than they are used to, which could have a serious negative impact on their family’s financial situation.

Currently, the mortgage interest deduction allows home owners to reduce their taxable income by the amount of interest paid on their home loan each year. Home owners can deduct the interest for up to $1 million of mortgage debt and up to $100,000 of home equity loan debt on both primary and secondary homes that aren’t rented out.

A recent nationwide survey of 800 likely voters commissioned by the National Association of Home Builders (NAHB) shows that no matter their political party affiliation or homeownership status, Americans don’t want their mortgage interest deduction to be taken away.

Here are some important results of the survey:

• Homeownership status: Even people who aren’t able to claim a mortgage interest deduction support it. Eighty-two percent of renters and 72 percent of owners think tax incentives to promote homeownership are reasonable.

• Political party affiliation: 69 percent of Republicans, 83 percent of Democrats and 70 percent of Independents think it is reasonable for the federal government to provide tax incentives to promote homeownership.

• Comparison to other tax credits: An overwhelming majority of Americans — 81 percent — feel that the mortgage interest deduction should remain in the tax code. This compares to 82 percent for medical expenses, 76 percent for state/local taxes, and 66 percent for charitable deductions.

Critics of the deduction argue that it favors high-income taxpayers over lower to moderate income earners who need it most. But according to the Joint Committee on Taxation, 89 percent of taxpayers benefiting from the deduction make less than $200,000 annually.

Research by NAHB economists — using the Internal Revenue Service Statistics of Income data — also shows that as a share of household income the biggest beneficiaries are younger households, who typically have large mortgages, small amounts of equity in their homes and growing families. A copy of the report can be found at www.nahb.org/TaxIncentivesStudy.

Current home owners rely on the mortgage interest deduction to help offset the costs of homeownership each year and prospective buyers take the deduction into consideration when choosing homeownership over renting. Any change to the tax code that limits or eliminates the deduction will negatively affect homeownership in America.

Learn more about the threat to the mortgage interest tax deduction and connect with others on Facebook at www.facebook.com/SaveMyMID .

Do you leave your crawlspace vents open all year?

Research indicates rather than removing crawl space moisture, venting makes the problem worse. Especially here in the Eastern United States.
Here’s a snapshot of what happens to the air in a vented crawl space. When hot air rises, most of the air escapes into the upper areas of your home finding its way outside. As the hot air leaves, cool air rushes in through inefficient windows, leaky doors and open crawl space vents to replace it. Then the cycle is repeated. The air in the crawl space that gets sucked up into the home brings along moisture, dust, allergens, mold spores and possibly radon. Because of this cycle, any possibility of meaningful cross-ventilation, allowing moist air to leave through the crawl space vents, is negated.
Building Scientists have found consistently, that when warm, moist outside air enters a crawl space, through an open vent, it instantly cools and drastically increases the relative humidity of the crawl space. When the relative humidity goes over one hundred percent, the moisture is released into the crawl space atmosphere, resulting in condensation accumulation on the earth floor, walls and building components. This accumulation provides an environment conducive to support organic growths such as mold and mildew.
The 2003 International Residential Code (IRC) somewhat acknowledged the problem with - R408.2, Exception 1, stated, "Where warranted by climatic conditions, ventilation openings to the outdoors are not required if ventilation openings to the interior are provided."
Then in the 2006 version of the International Residential Code Section R409 was added as an option - R409.1 “Closed crawl spaces shall be built to minimize the entry of the outdoor air into the crawl space. Specifically prohibited are foundation wall vents.”
The 2009 International Residential Code Edition carries the same theme but with more emphasis on energy efficiency such as air leakage controls.
Crawl space humidification by evaporation of soil moisture is related to the soil moisture content and temperature. Evaporation is generally greatest during summer, when the soil is warm, and least during winter, when it is cold. Vapor barrier ground covers help inhibit evaporation from crawl space floors, thereby lowering crawl space humidity levels.
Unless your home is relatively new, almost certainly your crawlspace has foundation vents. If this is the case for your home, at a minimum, I recommend completely covering your crawl floor with a 10 mil poly / plastic overlapped twelve inches at the seams. The seams should be taped with a vinyl/ waterproof tape. This covering will serve as a moisture vapor barrier over the earth / soil ground cover to inhibit evaporation into the crawl space. Running the vapor barrier up the foundation walls is recommended. If the vapor barrier is run up the crawl space wall to the level of the floor joists, termites could build mud tunnels on the foundation wall that would be hidden from view. So, a three inch inspection gap should be left, exposing the bottom of the wood floor framing and masonry wall.
If the crawl space houses an appliance such as a furnace or hot water heater, the appliance, in most cases, needs make-up air for combustion. Consult your HVAC professional before sealing off any vents. Typically, where appliances are present an inexpensive “make up” air supply is easily installed.
To learn more about crawlspaces and if sealing your crawlspace is a better choice for your family’s home, visit: www.crawlspaces.org.

About Chad D. Collins:
A licensed general contractor since 1997, custom home builder, Chad D. Collins has been transforming clients’ dreams into elegant homes while building a reputation for skilled craftsmanship. Chad’s commitment to excellence has earned Collins numerous top industry awards, including the coveted Triangle Sales and Marketing Council’s MAME Building Company of the Year in 2007 and 2008. To learn more about Chad and his services please visit: www.collins-design-build.com