Home Builders soften stance on mortgage interest deduction
WASHINGTON — The National Association of Home Builders is backing off long-held support for the mortgage interest deduction in hopes that the Trump administration can deliver on its promise of lower taxes.
“This is an internal shift for us,” Jerry Howard, the group's CEO, said in an interview. “We will explore alternatives to the mortgage interest deduction. We are willing to look at tax incentives for homeownership that are not necessarily the mortgage interest deduction.”
In a separate statement, said Granger MacDonald, the group's chairman and a builder and developer from Kerrville, Tex. “This is the first time in NAHB’s 75-year history that we have been open to the idea of broader options regarding housing tax incentives.”
Housing groups have long defended the mortgage interest deduction because it makes homeownership a more appealing investment. But Republicans want to simplify the tax code in addition to lowering tax rates.
The proposal released last week by the Trump administration and GOP lawmakers would double the standard deduction to $12,000 for individuals and $24,000 for married couples, reducing the appeal of the mortgage interest deduction.
While the GOP blueprint retained the mortgage interest deduction, the overarching goal is to eliminate loopholes and specific deductions in order to get an overall lower rate.
“When you double the standard deduction, you basically dilute the impact of the mortgage interest deduction as an incentive for first-time home buyers,” Howard said.
However, he said the homebuilder group is looking at the plan holistically, and in the aggregate it is something that the group could potentially support.
“The feeling was that the tax code needs reform and that this framework that has been issued … puts money back into the pockets of the American middle class,” Howard said. “If we can find a way to double the standard deduction and at the same time promote homeownership among the first-time home buyers, the middle class, you have a win-win situation.”
He also noted that “our members are businesspeople” and support a lower tax rate for businesses.
The framework released last week would lower the rate for sole proprietorships, partnerships and S corporations to 25% and reduce the corporate rate to 20%.