Relief from Tax Foreclosure Property Listings
About 33 percent to 35 percent of Americans, those in the higher income level, will be tapped by the Obama Administration to pay for its foreclosure prevention program.
Specifically, the Obama Administration has proposed to reduce deductions of mortgage interest for wealthy taxpayers to help borrowers avoid being added to the tax foreclosure property listings.
The proposal would restrict the tax break at 28 percent for itemized deductions. This would mean that in order for struggling homeowners to avoid inclusion in tax foreclosure property listings, wealthy Americans would have to contend themselves to smaller deductions of local and state taxes, mortgage interest and other items, including charitable contributions.
The proposal is in line with President Barack Obama’s campaign commitment to increase taxes for individuals and families earning over $250,000. There are only few struggling homeowners who belong in the tax bracket over 28 percent.
The proposal is expected to raise about $318 billion within 10 years and to help distressed homeowners avoid being added to tax foreclosure property listings.
Center for Economic and Policy Research co-director Dean Baker said that the Obama budget plan impressed him, adding that taxpayers, especially owners of distressed properties, should not subsidize mortgage payments for wealthy Americans.
On the same note, Tax Foundation chief economist Patrick Fleenor said that standardized deductions are given to majority of people who are in the lower and middle income level when they file for taxes. He added that these people, especially those who are potential candidates for tax foreclosure property listings, do not receive any benefit from mortgage interest deductions.
Homeowners in the upper-tier of the society or those who earn over $357,700 annually received a tax return of 35 cents for each dollar they pay on mortgage interest. But the Obama Administration proposed that the tax return benefit would be cut down by 20 percent to 28 centavos for each dollar.
However, the housing industry is demoralized by the proposal to cap tax break for higher income people to help some homeowners avoid being added to the tax foreclosure property listings.
National Association of Homebuilders President Joe Robson pointed out that the proposal would bring down the value of expensive houses by increasing the cost of home ownership.
Additionally, industry sources pointed out that the proposal is focused on wealthy Americans but the impact would be felt in every niche of the housing market, especially by homeowners who are facing the possibility of being added to the tax foreclosure property listings.
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- Anti-Foreclosure Homes Plan: Benefits Outweigh Limitations
- A Perspective on the Foreclosure Control Initiative
- Buyers Survey Florida Foreclosure Property Listings
- Homes in Tax Foreclosure Property Listings Attract Crime
