Commission Calls for Changes to Mortgage Interest Tax Deduction

A White House commission released a draft plan this week to cut the federal budget deficit by hundreds of billions a year through a combination of slashing spending and eliminating popular tax deductions.

Among the proposals put forth in the lengthy draft are limiting mortgage deductions to exclude second residences, home equity loans and mortgages over $500,000, all of which could potentially hit Southern California hard.

For businesses, the plan would significantly lower the corporate tax rate — from a current top rate of 35% to as low as 26% — but also eliminate a number of deductions. It would make permanent the research and development tax credit.

The plan, developed by a bipartisan commission, would hold down the growth of the federal debt by about $3.8 trillion by 2020.

Read the complete commission draft

Read NAHB's fact sheet on mortgage interest deductions

Photo credit: Flickr user Arghmonkey