Saturday, February 28, 2009

Mortgage tax deduction to get cut dramatically under Obama tax increase on the wealthy

True to his word, taxes are going up on those able to consider buying a single family home in Palm Beach.

While mortgage is only deductable up to 1.1 milllion, there will be a large loss for those in the upper income brackets, making the true monthly cost of owning a home rise by 20% :


"The tax increases would raise an estimated $318 billion over 10 years by reducing the value of such longstanding deductions as mortgage interest and charitable contributions for people in the highest tax brackets. Households paying income taxes at the 33% and 35% rates can currently claim deductions at those rates. Under the Obama proposal, they could deduct only 28% of the value of those payments.


The changes would be phased in gradually over the next few years. For the 2009 tax year, the 33% tax bracket starts with couples with taxable earnings of $208,850, when adjusted for personal exemptions and various deductible expenses. A taxpayer in the top bracket paying $1,000 of mortgage interest, for example, would see a tax break worth $350 reduced to $280."

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