As the year approaches a close, many big items are on the agenda in Washington. Two of the nation’s most controversial issues will soon be decided, either of which could have a major impact on homeowners around the country.
The mortgage interest tax deduction is one of two mortgage policies set to expire come December 31, 2012. Allowing for homeowners to reduce their taxable income by the amount of interest they pay towards their mortgage loans each year, this program is a staple of financial assistance each year to millions of Americans. The problem lies in a partisan argument. Some say the deduction should be capped, or eliminated altogether, to facilitate spending cuts and deficit reduction efforts. Others argue that making any changes to the policy could have a devastating blow to homeowners and further stall the recovery of the housing market.
The Mortgage Forgiveness Debt Relief Act is the other policy gaining focus in these remaining weeks. Signed into place in 2007, the bill allows for most forgiven mortgage debt from being taxable. This bill has helped millions of homeowners resolve their mortgage troubles through short sales, rather than face foreclosure. Under this policy, homeowners are not required to report the deficiency balance of the home as income in their taxes, keeping many out of the additional problem of tax debt. The push to keep this policy centers around the implication that this bill has allowed for the housing market to have a fighting chance at recovery, as it has moderated the number of foreclosures that plagued an already saturated market.
While, there is no clear-cut answer that can even come close to solving all of the issues presented right now, we do know that protecting our futures is one aspect both sides can agree on. Ultimately, it is hoped that some compromise can surface that works to the better good of the society as a whole.