This legislation has been lurking in the background for too long.  I think this answers some questions and allays some fears about the world coming to an end.

 

 

                                

           Since not much has been published about the actual rules that will apply to the mortgage interest deduction and I could not find anything any where for people making over $250,000, I called our accountant and  the story isn’t nearly as bad as I originally thought.  While it may have a bearing on some of our business, I don't think it will disrupt our business, nor our local economy.

 

          This legislation is mostly aimed at people owning homes that make over $250,000 a year.  First, if a person has a million and a half dollar mortgage, he or, she can only declare the interest deduction on 1 million of that loan.  Interest on that loan would be, let's say, $55,000.   Presently, if the person is in a 35% bracket he can deduct 35% of that $55,000 interest or, $19,250.   Under the new proposal the tax deduction percentage would go from 35%, down to 28% or $15,400 of the $55,000.  While this revelation won't be met with great leaps of joy, it will be more acceptable than -0- deductions.  Additionally, with cash buyers (which we have a surprising number) there is obviously no deduction since no interst has been paid.

 

          Several things should be noted.  First, this program will not phase in until the 2011 tax year for tax returns made out in 2012.  Secondly, this program has not been approved as yet in its' final form.  Between us guys, there are enough politicians being affected by this program that there is a chance that it will be watered down before it finally hits the street.