Despite the looming fight in Washington over taxes and government spending, now isn’t the time to curtail tax breaks that benefit homeowners, says Department of Housing and Urban Development secretary Shaun Donovan.
In an interview scheduled to air Sunday on C-SPAN, Donovan said it would be unwise to get rid of — or even scale back in any significant way — the tax break that allows homeowners to deduct the interest they pay on their mortgages.
“Anything that would change the system substantially now,” he said, would create “a real risk of stopping the momentum that we have in the housing market.”
Donovan’s comments echoed those on the campaign trail earlier this week by President Obama, who vowed to keep the widely popular mortgage-interest deduction and various other tax breaks in place for middle-class families.
“I refuse to ask middle-class families to give up their deduction for owning a home or raising kids just to give millionaires a tax cut,” Obama said at one event in Wisconsin.
The White House has, however, proposed phasing out the mortgage-interest deduction for taxpayers making more than $250,000.
The tax break, which powerful industry groups such as the National Association of Realtors have vowed to protect at all costs, predominately benefits the top fifth of income earners because they own larger houses and hold larger mortgages. Many Americans don’t make enough income to take advantage of the tax break.
Still, it is one of the most expensive giveaways in the nation’s tax code, amounting to about $90 billion a year.
In the taped interview, Donovan also pressed Congress to act on legislation that would make it easier for struggling homeowners to take advantage of record-low interest rates to refinance their mortgages and lower their monthly payments.
Donovan also defended the administration’s housing aid programs, saying that although they have helped fewer homeowners than initially predicted, officials have continued to make changes that have allowed millions of Americans to refinance or modify their loans.