Brownback proposes eliminating mortgage interest deduction to close budget shortfall
6:46 PM, Jan 16, 2013
9:30 PM, Jan 16, 2013
FAIRWAY, Kan. - Twelve years ago, David Bartlett bought a home in Fairway, Kan.
Although buying a home is a pricey decision, one of the perks has always been his opportunity of receiving state income tax deductions based on the interest paid on his mortgage.
"All these extra taxes they keep piling on, doesn't help your bottom line for the year," Bartlett said.
Now, Bartlett's bottom line could be affected again.
In his new budget proposal, Governor Sam Brownback is asking lawmakers to eliminate the mortgage deduction. That decision could take away extra cash from homeowners like Bartlett, to help balance the state's budget.
"I definitely would like them to look someplace else for those revenue gains they're looking for. I think there are enough home owners that are paying enough taxes, that we don't need to lose what he's trying to take now," Bartlett said.
Ross Costanzo, team leader with Keller Williams Realty, Eastland Partners, said taking away the deduction could change the way realtors and customers do business.
"It's going to affect how homes are negotiated out, and acceptable prices for the values," Costanzo said.
Most importantly, Costanzo said it could force buyers in the Kansas City area to question whether staying in Kansas is the best decision, or if moving across the state line makes more financial sense.
"I think it's going to be a sit down conversation with your customers and clients, as to a needs analysis," he said.
More than 417,000 Kansans receive about $451 million in state income tax relief each year from the mortgage interest deduction and other itemized deductions, according to the Kansas Association of Realtors.
The home interest deduction saves taxpayers an average of $390 a year.
Governor Brownback said his proposed budget changes and cuts could save the state about $541 million.