Could We Lose Some Real Estate Tax Breaks?
CNNMoney has an article discussing some possible proposed changes to the tax code which may reduce the tax benefits of real estate investment. The presidents Tax reform Panel is look into ways of changing the tax code to make it fairer and promote economic growth. The article lists some possible options which may be proposed:
* Reducing from $1 million the size of a mortgage on which interest may be deducted. If such a proposal were made, it’s possible that the mortgage size would vary by region depending on local home prices.
* Replacing the mortgage-interest deduction with a tax credit, allowing all homeowners with a mortgage to get a tax break — not just those who itemize.
* Reducing the tax rate at which mortgage interest may be deducted. Likely a proposed rate would be a middle-income tax rate, such as 15 percent or 25 percent. That would preserve the benefits of homeownership for middle-income taxpayers, Poterba said.
* Reducing the total capital gains exempted from tax.
* Combining two of these elements — say, reducing capital-gains exemption threshold and lowering the deduction rate on mortgage interest.
Its not quite time to panic yet. These are just proposals, and even if they are introduced, they may be grandfathered in or phased in over time.