Congressional Budget Office delivered its latest revenue-raising options for Senate and House consideration as they write this fall’s tax and budget legislation.
Tucked away in the report are several incendiary plans that could – if adopted – cost homeowners billions of dollars. Though not formal legislative proposals, the CBO’s options represent a handy fiscal menu for legislators to pick and choose from to reduce the deficit – now at unprecedented levels – or to pay for new programs they might want to advance.
Tops on the CBO’s hit list for housing: Slash deductions for homeowner mortgage interest from the present $1.1 million limit to $500,000, phased in with $100,000 annual reductions starting in 2013 and extending to 2019. Under current law, taxpayers can write off mortgage interest on their principal home debt up to $1 million, and on home equity debt up to $100,000.
Under the CBO’s option, that maximum mortgage debt amount would shrink yearly until it hit $500,000. Over a 10-year period, this change alone would boost federal tax collections by an estimated $41 billion.