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Will New Tax Reform Eliminate Home Owner's Tax Deductions?

The Director of the National Economic Council and chief economic advisor, Gary Cohn says, "Homeowners don't buy houses because of the tax deductions." He may be mostly right that this is not the "primary" reason however, there are several reasons people buy homes today including financial, practical, and emotional. For the vast majority of Americans who make the choice of home ownership, in most cases it is by far their single largest investment. I believe most people purchase a home because it represents security and a way to build wealth and a sense of stability for themselves and their families.

A taxpayer can only take the deduction if they itemize their tax return, and just one-third of taxpayers itemize, but about 64% of Americans own a home (and just over one-third of homeowners have no mortgage). Three-quarters of those who do itemize take the deduction.

The National Association of Realtors, one of the most powerful lobbying organizations in Washington, strongly opposes any change to the deduction. Even though there has been no change to date, they came out against the current plan, claiming it would result in fewer taxpayers itemizing, it would weaken the power of the deduction.

"This proposal recommends a backdoor elimination of the mortgage interest deduction for all but the top 5 % who would still itemize their deductions," wrote NAR President William Brown in a release. "When combined with the elimination of the state and local tax deduction, these efforts represent a tax increase on millions of middle-class homeowners."

In response to Cohn's statement, Brown said, "There's a reason our nation has incentivized homeownership in the tax code for over a century. It works, and helps make homeownership more affordable for middle-class families who might not otherwise be able to close the deal, while setting them on track for a strong financial future." Trump's Chief Economic Advisor Cohn recently said in an interview, "That this administration will protect this popular tax break." Do you believe him?

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