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About Street roots. (Portland, OR) 1998-current | View Entire Issue (Jan. 13, 2017)
Housing advocates want lawmakers to cap the state's mortgage interest deduction. Realtors are ready to p u t up a fight for its preservation. A taxing issue BY JOANNE ZUHL opportunity Network, a statewide coalition of affordable housing and low-income regon s biggest - and most beloved services, in spearheading legislation for the housing subsidy is subsidizing the 2017 legislative session in Salem. The two wrong people. groups are joined by the Human Services That s the perspective of a growing * Coalition of Oregon, Oregon Housing coalition of organizations looking to modifj Alliance, Tax Fairness Oregon, and Habitat Oregon’s mortgage interest deduction, or for Humanity of Oregon in calling for caps MID, to make it more equitable for on the deduction and more equitable moderate- to lower-income homeowners. distribution of the subsidy. These are the homeowners who need it Every homeowner knows about the MID, they say, not the state’s top 20 percent of * but not all reap the same benefits. mcome earners, who claim more than 60 It allows homeowners who itemize their percent of the state subsidy in terms of taxes to deduct from their taxable income dollars. the interest paid on mortgages up to $1 At a time when we are facing a severe million. Considering that payments in the housing crisis in Oregon, the biggest early years of any 20- or 30-year loans are housing subsidy in our state is mostly givim largely interest, the amount can be money to the most well-off Oregonians - ‘ substantial. people who already have a home, who are in The deduction is expected to cost the secure shelter for themselves and really do state an estimated $1 billion in forgone not need any help from the state to afford a income tax revenue for the 201749 budget home, said Juan Carlos Ordonez, While the details of the proposal are yet communications director with the Oregon to be determined, the proposal lays out Center for Public Policy, or OCPP. several modifications: ‘Reforming the MID is something that B * CaP the amount of mortgage interest STAFF W R ITE R _ B * ? ° uld done a lon§ time ago. But uregon s housing crisis certainly adds urgency to this.” The OCPP is joining the Oregon d®ducted on state taxes at this leyeV ptyponentesay Hi,. -- -- nunic. liupufieilLS ( the changes emphasize that this would not affect rental housing, since landlords take different deductions for rental property. ■ Ultimately phase out the deduction fo: high-income households. While the proposed bill cannot obligate how the revenue generated from the cap would be spent, it does call for establishing “legislative intent” to use the tax savings or affordable housing, rental housing and homelessness prevention. Housing advocates say these modifications could generate at least $100 million biennially for housing needs across the state. Another option proponents say they would consider instead of the cap would be to convert the deduction into a refundable tax credit applicable to all taxpayers, not just those who itemize their taxes.lt could also make higher income brackets exempt. Basically the policy is upside down,” said Kuth Adkins, policy director with the Oregon Opportunity Network. “The Legislative Research Office has confirmed that Oregon’s mortgage interest deduction l.hMni) ¿iliLLTuMu T1 7 i J° " tynnnh0me0W nerswon’t be affected. the same time, we know we have a housing A $300,000 mortgage, for example, under current interest rates would create $12,652 m mterest payments its first year. (The median price for homes listed in Oregon is $319,000, but in Portland it is in excess of $400,000, according to Zillow.) ■ Eliminate use of the crisis across the state, but specifically folks in low- to moderate-income families, particularly in communities of color^ are shut out of homeownership. And we also have a lot of current homeowners with low incomes who are facing the possibility of r e p Z 1”61r h° meS d“e t0 " eeding he’P S Adkins said they want to see the recouped money applied to support homeownership, just at more middle- and lower-mcome brackets, such as starter home development and down-payment assistance for first-time homebuyers. We need to get this back in line with our values and what’s sensible as policy, so we free up some revenue and invest it in homeownership for low-and moderate- income families,” Adkins said the Ore 6 OtA h er °f the ar«ument is the Oregon Association of Realtors, which has smd it would oppose any new c^p on the deduction. From the Realtors’ s s g i i g l B which benefits coastal and vacation area communities. The proposal would apply only to state a ' i " « ' “’' ' " ' 1” " ''“ homeownership and that without it, See MORTGAGE. page s Higher-income homeowners in a higher tax bracket have that same percentage applied ■Uudtifli iGtioas^such. as for mortgage ' interest. Research from the Oregon Center for Public Policy, which is calling for a lower cap on the mortgage interest deduction, conclude that-the top fifth of state taxpayers receive more than h a lf- 61 p e rc e n t-o f the subsidy dollars.
