A major housing industry group said it is open to the possibility of Republicans changing one of the sector’s most cherished tax breaks: the deduction for mortgage interest.
The National Association of Homebuilders voted Tuesday to revise its policy on taxes to allow for the possibility of a tax code overhaul that could change the mortgage deduction.
“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,” said the group’s chairman, Granger MacDonald. “Now is the time to reform tax policy, and housing will not be left behind in this process.”
The group’s new policy calls for a tax incentive for homeownership, but not specifically the mortgage interest deduction.
The group previously had called the break a “cornerstone” of housing policy.
The group still defends other housing tax breaks, including the low-income housing tax credit, and the exclusion of capital gains on a principal residence from taxable income.
The GOP tax plan likely would be a boon to homebuilders. In particular, it would create a special, new 25 percent tax rate for businesses that file on the individual side of the tax code, a priority for the group.
So far, Republicans have been able to keep homebuilders open to legislation. Because the plan is to pay for lower rates by eliminating many credits, deductions and other tax breaks, the housing lobby threatened to pose a major obstacle.
Under the plan, Republicans would crimp the mortgage interest deduction by doubling the standard deduction to $24,000. Taxpayers have the option of taking the standard deduction or itemizing specific deductions. With the much larger standard deduction, fewer people would benefit from itemizing, lessening the value of specific deductions such as the one for mortgage interest.
More recently, House Republicans have mulled the possibility of allowing some taxpayers to choose between deducting their mortgage interest costs or their state and local taxes.
