RHODE ISLAND ASSOCIATION OF REALTORS®, INC.

"The Voice of Real Estate in Rhode Island"
Serving Rhode Islanders Since 1948
Follow us:

Press Release

Contact: Kerry Park
Ph: 401-432-6948
Email: kerry@rirealtors.org

REALTORS® Warn Homeowners About Changes to the Mortgage Interest Deduction

Warwick, RI, October 5, 2011…The Rhode Island Association of Realtors and State-Wide Multiple Listing Service launched a consumer awareness campaign this week to alert homeowners to discussions in Washington centered on changes to the mortgage interest deduction (MID). Changes to the tax code are part of ongoing discussions to correct the federal deficit but Realtors warn that modification or elimination of all or part of the MID could have devastating effects on the economy. 

Currently, the federal government allows for a deduction of mortgage interest payments from income for tax purposes, saving homeowners thousands of dollars each year. In general, any homeowners who pay U.S. taxes and who itemize their taxes can deduct mortgage interest attributable to their primary residence and second-home debt totaling $1 million, and interest paid on home equity debt of as much as $100,000.

In Rhode Island, 72 percent of homeowners hold a mortgage. The average amount of income deducted by those owners is $10,951.  At a marginal tax rate of 25 percent, the average Rhode Island tax payer saved $2738 by claiming the deduction, according to an analysis by the National Association of Realtors (NAR).  

"The money that is generated through the mortgage interest deduction goes back into the economy by increased purchases of goods and services. It also makes home ownership affordable for thousands of lower and middle-class families. To take it away has the effect of adding a tax on housing which is not what Americans need, especially now while our housing market and economy is suffering," said Stephen Antoni, President of the Rhode Island Association of Realtors.

NAR economists predict that elimination of the MID could devalue the country’s housing stock by another 15 percent. Even those not claiming the deduction would be affected by the downward pressure on housing prices. MID exclusions which affect only some properties, like second homes or investment properties, would decrease home values for everyone, particularly in states like Rhode Island with a large base of this type of housing stock.

Homeowners already pay more than eighty percent of all federal income tax, and among those who claim the mortgage interest deduction, 91 percent are lower and middle-income earners according to NAR. The Realtors' association argues that creating an even bigger tax burden for these Americans creates an unfair burden and will hamper economic activity. 

"Now more than ever, we need to protect home ownership. The Federal Reserve's Survey of Consumer Finances shows that the net worth of the average homeowner is $200,000 while the net worth of the average renter is only $5000. It makes no sense to take incentives away from housing when it is the one vehicle that creates wealth for citizens all over the country. Without that wealth, how is our economy going to grow?" Antoni asked.  "Lax and fraudulent lending got us here, not the MID. Housing is a driving force in the economy and until the housing market gets back on its feet, we can’t expect the economy to fully recover," he said. 

The Rhode Island Association of Realtors and State-Wide MLS is launching a radio and direct mail campaign asking the people of Rhode Island to contact their Congressional delegation about how changes to the mortgage interest deduction would affect them.  For more information about the campaign or the MID, visit www.riliving.com/MID.

Stephen Antoni

2011 REALTOR®
State President

About the Rhode Island Association of REALTORS®

The Rhode Island Association of REALTORS®, one of the largest trade organizations in Rhode Island with more than 5,000 members in nearly 1,000 offices, has been serving Rhode Islanders since 1948. Advocating for Rhode Island's property owners, the Rhode Island Association of REALTORS® provides a facility for professional development, research and exchange of information among its members and to the public and government for the purpose of preserving the free enterprise system and the right to own real property. Last year, RI Realtors transacted $6.9 billion in residential real estate sales and $7.1 billion in total sales and rentals including commercial transactions.

The Association is one of more than 1,500 boards and associations that comprise the National Association of REALTORS® (NAR). The National Association of Realtors®, “The Voice for Real Estate,” is America's largest trade association, representing over 1.5 million members involved in all aspects of the residential and commercial real estate industries and who subscribe to a strict Code of Ethics.