Talk of mortgage interest deduction elimination concerns area agents

LYNN – If Congress doesn’t find a way to deal with the so-called fiscal cliff by the end of the month, one potential repercussion has Lynn area real estate agents worried: loss or reduction of the mortgage interest tax deduction.Wire services and national media outlets on Monday were reporting that Congress is taking a serious look at whether to scale back or eliminate the deduction for homeowners and landlords, something local agents and the Massachusetts Association of Realtors say would deal a major blow to a recovery in the housing market that has finally taken hold.And with only eight formal sessions remaining in the lame-duck Congress, there are wider fears that a stalemate on resolving the debt and deficit will trigger the deep, across-the-board spending cuts and tax hikes slated for Jan. 1.U.S. Rep. John Tierney, D-Salem, on Monday told The Daily Item “there is tremendous potential” for Congress to work out a deal before month’s end, but he pointed at Republican lawmakers for pushing the crisis to the brink.Concerning President Barack Obama’s proposed elimination of Bush-era tax cuts for those with annual income above $250,000, Tierney said, “The problem is there are still some people on the other side [of the aisle] who don’t want to believe the President won the election ? Basically they’re sticking to the same line that lost the election.”He added of Obama’s plan, “This is not a tax cut for 98 percent of the people. It’s a cut for 100 percent of the people. People lose sight of that.”He explained the first $250,000 earned by every household would not be subject to the higher tax; but for a household that earns $250,001, “the higher tax would apply only to that $1.”As for eliminating the mortgage interest tax deduction – something some members of Congress have called for and the bipartisan Simpson-Bowles Committee recommended – Tierney said that, at least for middle-class homeowners, “realistically, I don’t think anybody has the stomach for that or wants to move in that direction.”He added, however, “It’s a different matter if we’re talking about people with yachts and vacation homes.”An across-the-board elimination of the mortgage interest deduction, he said, is not something he would support.”It’s bad timing for that right now,” Tierney said. “We ought to be doing more to help people out who are under water [on their mortgages].”Lynn area agents said Monday that any reduction or elimination of the mortgage tax break would stall the housing recovery and remove a major incentive for renters to become homeowners.”Housing drives the economy,” said David Hughes, owner of Century 21 Hughes in Lynn. Eliminating the mortgage interest deduction, he said, “would discourage people from investing in homes and investing in America.”Hughes said if middle-class homeowners, on average, save $2,000 a year from the deduction, “that’s $2,000 per household that would not stay in the community ? For Lynn that would be 24,000 (properties) times $2,000. That’s a huge amount out of the local economy.”He added, “This is not even something that should be discussed. Anyone who would support that should not be re-elected.”And even if the deduction were eliminated only for high-value homes, he said, that would still result in less revenue for states and, in turn, less revenue for municipalities.Hughes said he is wary of Congress’ ability to hammer out a deal under pressure.”There was a time [lawmakers] would get together and talk things out in public. They’re not doing that now. What bothers me is how are they going to be able to accomplish anything in 15 days, with eight (formal) sessions left?”Mike Connor, who along with his father, John Connor, is a principal of Connor Real Estate in Lynn, said elimination of the mortgage interest deduction would have “horrific” consequences for home sales and the overall economy.”That is how we get people into entry-level houses and why renters make that jump to becoming a homeowner, because of the tax inc