The Mortgage Interest Deduction: a Local, Bay Area Discussion


Today the MID (Mortgage Interest Deduction) was the hot topic in the San Francisco Chronicle Business Section. On the back of the section was a full-page ad taken out by the trade organization to which I am a card-carrying member, the California Association of REALTORS, urging the President and Congress to keep the MID. On the right bottom column was an article stating that home prices have increased 25% within California during the past year, something that I suspect would not have happened this year if the MID did not exist. Above that piece was Kathleen Pender’s article entitled “Mortgage tax break claims, fact” clearly implying that the claims made by the supporters of the deduction are less than factual. She raised some interesting points about the history of the deduction. It first appeared in 1913, when all interest was deductible, and few Americans had home mortgages.

I grew up in a household where owning property was seen as a significant part of the American Dream, and my personal goal (which I met by just a few months) was to own a home by the time I was 30 years old. Now as a Realtor, I am clearly part of the “housing lobby.” I take seriously my role to support the interests of home ownership. I also can attest first hand to the importance of the deduction to all of my buyer clients. In Berkeley, for example, where the average sales price has now crested over $800,000, a large number of homeowners are paying substantially more than the nation-wide median she quoted from Dataquick of $186,000. Many more are paying in excess of $15,000 in mortgage interest, with the value of the deduction being at least $2,000 each year. CAR is estimating that if the deduction were eliminated California homeowners would lose more than $350 billion in tax savings. Reducing the limit to $500,000 would impact a large number of Bay Area homeowners. But just as importantly, any change to the MID is very likely to reduce the overall values of real estate, impacting all homeowners, whether or not they currently itemize their deductions and directly take advantage of the MID.

It’s always good to explore how a national debate will impact your situation, and consider how the results might impact your community or your own industry. If you’re a homeowner, I urge you to visit It includes links to information about the deduction, as well as how to contact your representatives if you feel strongly that you want the MID protected. CAR is urging homeowners to call–not email, but actually call–their elected officials, and ask that the mortgage interest deduction be preserved. The public may reach Congress by calling 202-224-3121. The Capitol switchboard operator will help callers identify their member of Congress and connect them. I made that call and it was quick and painless. I urge you to do the same.


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