Downpayment IRA in lieu of mortgage interest deduction

[garfangle_IHB]

Since the days of no money down mortgage loans are long gone and will stay that way for probably a generation, why not help would be homeowners with their downpayment by creating a tax-sheltered savings account similar to an IRA or HSA? Currently, ordinary savings for a downpayment do not have preferred tax treatment. It is taxed once as part of your earned income and again as you receive interest income. Therefore, it is difficult to save enough to make a substantial downpayment to buy a house. If a downpayment tax shelter was created you could accumulate a downpayment that much faster.



If government wants revenue neutrality, it can implement this program by discarding the mortgage interest deduction. As home prices fall when the mortgage deduction is eliminated, would be home buyers will find more affordable options and with a tax-sheltered downpayment in hand, they will be in a much better position to afford a home than currently exists in today's troubled market.

 

[Major Schadenfreude_IHB]

I say eliminate any financial benefit that is associated with home ownership or its purchase. Benefits benefit no one except the existing home owners who are already "in" the pyramid scheme. As the recent bubble clearly indicates, people will stretch themselves financially to make that home purchase and will use whatever means available to them. This translates into higher house prices, not lower "affordable" prices. If you take away the financial step ladders from everyone, then home prices must descend to where people can reach them - not vice versa.



However, politicians will attempt to portray "assistance" to the first time buyers as something that benefits them. Of course, they are lobbied by the NAR to do so, the MSM is paid to spin it that way, and the stupid people believe the hype.



The truth is that everybody but the "newcomer" wins in that situation.

 

[usctrojanman29_IHB]

[quote author="Major Schadenfreude" date=1218109580]I say eliminate any financial benefit that is associated with home ownership or its purchase. Benefits benefit no one except the existing home owners who are already "in" the pyramid scheme. As the recent bubble clearly indicates, people will stretch themselves financially to make that home purchase and will use whatever means available to them. This translates into higher house prices, not lower "affordable" prices. If you take away the financial step ladders from everyone, then home prices must descend to where people can reach them - not vice versa.



However, politicians will attempt to portray "assistance" to the first time buyers as something that benefits them. Of course, they are lobbied by the NAR to do so, the MSM is paid to spin it that way, and the stupid people believe the hype.



The truth is that everybody but the "newcomer" wins in that situation.</blockquote>
While we are at it, lets eliminate all other deductions into ones for IRAs and student loans interest. haha Homeowner deductions incentive would-be buyers because they may be able to have net expenses less than their rent would be.