As the Trump administrations works on hashing out comprehensive tax reform, the Community Home Lenders Association penned a letter to address its serious concerns about the future of the mortgage interest deduction, along with the potential negative impact to it.
In a letter to the chairs and ranking members of the House Ways and Means Committee and the Senate Finance Committee, “The Community Home Lenders Association writes to express our serious concerns about the impact of proposals for large increases in the standard deduction – proposals that, however well-intentioned, could result in a significant devaluation of the mortgage interest deduction."
"The impact could be a lower homeownership rate, reduced home prices, fewer new construction starts, and ultimately harm to the broader economy," the CHLA letter said.
Earlier this year, U.S. Treasury Secretary Steven Mnuchin said the mortgage interest tax deduction will not be changed in the Trump administration’s tax reform.
The tax deduction was brought up as an issue this past election season when House Republicans proposed tax reform that would make the mortgage-interest tax deduction irrelevant for most Americans.
Given that nothing is guaranteed when it come to the future of tax reform, CHLA advised the following two requests:
1. Make the impact of the MID available in the official tax scoring of the bill.
"Therefore, CHLA requests that the Joint Committee on Taxation (JCT) be directed to calculate and display in their scoring of any tax bill the revenue impact currently associated with the MID that is transferred and effectively taken through an increased standard deduction – as well as the number of existing homeowners that would have the direct value of their MID reduced or eliminated.”
2. Congress needs to ameliorate a negative impact on the MID.
"Additionally, CHLA would request that any such tax bill include a restoration of all or a significant portion of this effective MID loss through the creation of a separate mortgage interest credit, mortgage interest deduction that can be utilized outside of the standard deduction, or home purchase tax credit.”