Tax Reform Plan Eyes Deductions For HELCs
The president's tax reform panel is recommending that income tax deductibility for home equity loans and second homes be eliminated from tax reform proposals.
At a public hearing last week discussing major changes to the U.S. tax code, panel member Elizabeth Garrett noted that the current mortgage interest deduction would be changed to a "home credit" where "up to" 15% of mortgage interest paid to build or acquire a home would count as a tax credit. The panel reiterated a previously disclosed recommendation to cap the mortgage interest deduction at loan sizes of about $300,000 from the current $1-million level. The panel also wants to eliminate the tax deductibility status of local real estate taxes. Jeffrey Zeltzer, president of the National Home Equity Mortgage Association, said his group opposes eliminating tax breaks for HELCs. "For the middle class what else is there?" he asked. "We disagree with the idea."
The credit union tax exemption is not expected to be addressed in the pane's final report.