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McMansion mortgage deduction under fire

The mortgage interest deduction is about as untouchable as it gets when it comes to tax policy.

One Congressman, however, wants to eliminate the tax break for folks who literally live large.

According to real estate columnist Ken Harney, Rep. John D. Dingell (D-Mich.), will introduce comprehensive climate-change legislation when Congress reconvenes next month. Part of Dingell's proposal, in the lawmaker's own words: "remove the mortgage interest deduction on McMansions -- homes over 3,000 square feet."

Texas_house_with_cattle_3 Them's fighting words in Texas where big is everything.

If Dingell's proposal became law, our whole Austin neighborhood would be deductionless. Yes, the hubby and I, too. Our house is a tinge over 3,000. Obviously, our plans to downsize when we moved back home to the Lone Star State went awry. Must be something in the water.

Harney reports that neither Dingell nor his staff would elaborate on the expected carbon-tax bill because its legislative language, on large houses as well as other proposals such as hefty new taxes on gasoline, is still being drafted. Similarly, there's no explanation as to why the cutoff point of 3,000 square feet was chosen.

Big house eco issues: But big houses are being targeted because they contribute to greenhouse gas emissions via heating, cooling, electrical usage and building materials. There's also the issue of highways and roads, full of owners driving to and from their big homes in far-flung subdivisions.

Granted, I have a vested interest in this bill. But arbitrarily picking a square footage number doesn't seem to be the most efficient way to go. I've lived in smaller, older houses that were incredibly energy inefficient. And our current abode is proving to be much more energy efficient since we got the new A/C earlier this summer.

I don't expect Dingell's proposal to go far, especially on such a closely-divided Capitol Hill. There's too much pure political controversy associated with the greenhouse gas issue, so look for the GOP (which also has its fair share of big house owners) to come down against the bill.

Even Dubya's blue ribbon panel charged with coming up with tax reform proposals was shot down, in part, because it called for the elimination of the mortgage interest deduction.

And, of course, we have the powerful real estate and lending lobbies, which are still taking hits thanks to the largely self-inflicted subprime debacle. Those folks definitely don't want to see things made more difficult, tax-wise, for homeowners who can afford big houses and associated deductible mortgage interest.

Harney's column addresses the concerns of the real estate industry, so check it out for the specific arguments against the Dingell measure.


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It would interesting to see how this whole scenario plays out, frankly I think it's absurd.


If they're going to do anything, maybe disallow second morgtage or home equity deductions? That is less lame and less arbitrary than assigning a square footage cutoff, and would (theoretically) discourage stupid borrowing.

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