Blog :: 03-2011

Mortgage Interest Deduction (MID) on the Chopping Block?

Who really benefits from the MID?

There's a lot of discussion going on. The National Association of Realtors, with 1.1 million members, strongly opposes proposals to reduce the mortgage interest deduction. Others are in favor and believe it's a partial solution to this country's unsustainable deficit. Get educated and decide for yourself. Watch this video from NAR.

The following letter may shed a little light on the subject.


January 2, 2011

It's a common misperception that the mortgage interest deduction benefits primarily the wealthy, as argued in the Washington Post's January 1 editorial, "Trim the Excessive Tax Subsidy for Real Estate."

In fact, the MID actually benefits primarily middle- and lower income families. Sixty five percent of families who claim the MID earn less than $100,000 per year, and 91 percent who claim the benefit earn less than $200,000 per year. As a percentage of income, the biggest MID beneficiaries are younger middle-class families.

The MID helps many families become home owners by reducing the carrying costs of owning a home. The ability to deduct the interest paid on a mortgage can mean significant savings at tax time. For example, a family who bought a home last year with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 5 percent, could save nearly $3,500 in federal taxes when they file next year. That's real money they can use to pay down other debts, save for their children's college education, or put away for retirement.

It's no wonder, then, that most Americans support the MID. In fact, in a recent NAR survey by Harris Interactive of 3,000 home owners and renters, nearly three-fourths of home owners and two-thirds of renters said the MID was extremely or very important to them.

Unlike the very rich, much of whose wealth is tied to the stock market, the wealth of most middle-class American families is connected to their home. Millions of these Americans bought their homes with the understanding that mortgage interest is tax-deductible, and many of them have steadily paid down their mortgages to build equity in their home. Eliminating or reducing the MID would destroy part of this hard-earned equity for all home owners, independent of their tax filing status.

Furthermore, we also need to be mindful that home owners already pay 80 percent to 90 percent of U.S. federal income tax, and this share could rise to 95 percent if the MID is eliminated. Proposals that would remove certain tax benefits in return for lower tax rates just may hold for one or two terms of Congress before the tax rates are changed again. Americans are not naïve; they understand the nature of Washington politics.

For people who don't have hundreds of thousands of dollars in savings to buy a home outright, tax benefits like the MID help them begin building their futures through home ownership. In a time when the middle class faces increased economic pressures, you can be sure that the National Association of Realtors® will remain actively engaged to ensure that hard-working, home-owning families continue to receive this important benefit.

NAR Chief Economist Lawrence Yun

NATIONAL ASSOCIATION OF REALTORS®' Chief Economist, Lawrence Yun sent that response to the editor of The Washington Post in response to the January 1, 2011 article, "Trim the Excessive Tax Subsidy for Real Estate."

I don't have all the answers but I know for certain that I personally depend on my mortgage interest deduction. It's a tremedous help to my financial situation and I am not wealthy, nor am I in the "upper bracket". It's also true that most of my "wealth" is connected to my home and I believe most of middle-class America is in the same boat.

Get the facts. Educate yourself and then let your legislator know!

Another Advisor Joins the Windhill Team!

Help us welcome Tim Lasquade of Ipswich, MA to the Windhill Team!

Tim is an Ipswich resident who graduated from Saugus High School and later attended Merrimack College where he received his Bachelors degree in Accounting and Finance. Tim joins the Windhill team with over fifteen years in the construction industry.  He has held positions on the general contracting side of the business, as well as in residential building material sales and estimating.  This experience and building knowledge makes him an asset to any buyer or seller due to his ability to project the cost of additions, new construction, or other building enhancements.

Tim is a dedicated professional who strives to achieve the highest level of customer satisfaction.  He believes in building long lasting relationships in his community, workplace, and personal life.        

Tim enjoys spending time with his wife, son, family and friends.  His other activities include kayaking, canoeing, and fishing.

We are all very excited to have Tim on our team! He can be reached at:  tlasquade@windhillrealty.com and direct at 781-526-6088

Legal Insider - The NEW Massachusetts Homestead Law

 

Atty. Judy Field

 

Did you know about the Homestead Law? This law effects every homeowner and these changes are effective in just a few days.

For a thirty-five dollar filing fee, Massachusetts homeowners have the ability to protect their principle residence from the claims of certain creditors up to $500,000.00.  Until recently, this protection was only available to homeowners who prepared and filed a "Homestead Declaration" with the Registry of Deeds.  On December 16, 2010, Governor Patrick signed into law the most extensive changes to our homestead law in more than a generation ("The Act"). The Act (Chapter 395 of the Acts of 2010, rewriting M.G.L.c. 188) allows homeowners to choose between Automatic Homesteads, created without a declaration, and Declared Homesteads, available only when the homestead declaration is recorded.  It is important to stress the Automatic Homesteads allow protection up to only $125,000.00 versus the Declared Homesteads allowing protection up to $500,000.00. Key difference!

The new law effective March 16, 2011 amends and clarifies the Homestead Act in some of the following ways:

  • All Massachusetts homeowners will receive an automatic homestead exemption of $125,000 for protection against certain creditor claims on their principal residence, without the need to prepare or record a declaration.
  • All Massachusetts homeowners having "declared homestead exemption" by filing a declaration of homestead at the registry of deeds will continue to be eligible for the $500,000.00 protection.
  • Same-sex married couples have the same rights and protections as are afforded all "married spouses" under the Homestead Act.
  • Homesteads protection will be available for 2-4 family homes.
  • Homesteads protection will be available for homes in trust  if a beneficiary of a trust that takes title to a home intends to occupy the home as his/her principal place of residence, the protection under the statute extends to the beneficiary (although the trust beneficiary must be identified in the homestead declaration as the beneficiary of the homestead).
  • If a single homeowner subsequently marries, the spouse becomes entitled to the benefits of the homestead automatically. 
  • Homesteads now pass on to the surviving spouse and children who live in the home.  Again, married same-sex couples are considered "spouses" for the purposes of the Homestead Act.
  • You do not have to re-file a homestead after a refinance.  Under the new law, homesteads are automatically subordinate to mortgages, and lenders are specifically prohibited from having borrowers waive or release a homestead.
  • The Act imposes a duty on closing attorneys or settlement agents in all mortgage transactions to provide the mortgagor with the notice of the right to declare a homestead.

 Legal Insider Content Contributed by Attorney Judy A. Field. Contact Atty. Field at judy@judyafieldlaw.com.

February Real Estate-What Sold in Topsfield, MA?

Single Family        
60 Ipswich Rd, Topsfield, MA 3 1.5 $274,000 $244,000
177 High St, Topsfield, MA 3 1.5 $359,000 $330,000
19 Arrowhead Rd, Topsfield, MA 3 1 $361,400 $352,000
7 Mansion Dr, Topsfield, MA 3 2 $439,900 $437,300
19 Towne Ln, Topsfield, MA 5 2.5 $495,000 $465,000
21 Alderbrook Dr, Topsfield, MA 4 2.5 $619,000 $619,000
61 Alderbrook Dr, Topsfield, MA 4 3.5 $699,900 $650,000

 

This representation is based in whole or in part on data supplied by our MLS partners. These entities neither guarantee nor are responsible for data accuracy. Data maintained by MLS may not reflect all real estate activity in the market.

February Real Estate-What Sold in Rowley, MA?

Single Family        
8 Cedarwood Ln, Rowley, MA 2 1 $239,000 $210,000
7 Arrowhead Cir, Rowley, MA 4 2.5 $549,900 $518,000
         
Condominium        
870 Haverhill St 2A, Rowley, MA 2 1 $54,900 $57,000

 

This representation is based in whole or in part on data supplied by our MLS partners. These entities neither guarantee nor are responsible for data accuracy. Data maintained by MLS may not reflect all real estate activity in the market.

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February Real Estate-What Sold in Hamilton, MA?

Single Family        
276 Forest St, Hamilton, MA 4 2 $229,900 $220,000
428 Essex St, Hamilton, MA 3 1.5 $650,000 $575,000
193 Woodland Mead, Hamilton, MA 4 3.5 $775,000 $739,000

 

This representation is based in whole or in part on data supplied by our MLS partners. These entities neither guarantee nor are responsible for data accuracy. Data maintained by MLS may not reflect all real estate activity in the market.

February Real Estate-What Sold in Danvers, MA?

Single Family        
23Andover St, Danvers, MA 3 1 $209,900 $201,500
5 Hanson Rd, Danvers, MA 3 1.5 $299,900 $285,000
121 Forest St, Danvers, MA 4 2 $399,000 $363,000
         
Condo        
180 Maple St-B, Danvers, MA 3 1.5 $209,999 $209,999
97 Sylvan St.#7, Danvers, MA 3 2 $218,500 $205,000
61 Adams St#1, Danvers, MA 3 2.5 $319,000 $312,000
86 Abington Rd, Danvers, MA 3 1.5 $324,000 $305,000
         
MultiFamily        
5 Oak St, Danves, MA 2 Unit $334,899 $310,000
24 Lawerence St, Danvers, MA 2 Unit $349,900 $341,500

 

This representation is based in whole or in part on data supplied by our MLS partners. These entities neither guarantee nor are responsible for data accuracy. Data maintained by MLS may not reflect all real estate activity in the market.

February Real Estate-What Sold in Wenham, MA?

Address #BR #BA List $ Sale $
Single Family        
3 Longfellow Rd, Wenham, MA 3 1 $250,000 $235,000
7 Puritan Rd, Wenham, MA 3 1 $385,000 $375,000
35 Topsfield Rd, Wenham, MA 3 2 $439,000 $425,000
3 Morgan St, Wenham,MA 4 3.5 $599,000 $521,250
16 William Fairfield Dr, Wenham, MA 4 2+2 $799,000 $730,000

 

This representation is based in whole or in part on data supplied by our MLS partners. These entities neither guarantee nor are responsible for data accuracy. Data maintained by MLS may not reflect all real estate activity in the market.