Definitely, the real estate market is down despite some signs of progress in some areas. The number of foreclosed homes continues to rise and values of homes also continue to fall. The federal government has subsidized most of the losses of the housing market. It has been subsidizing a big fraction of the housing investments for many years, as evident in their different programs to help people own a home. Besides the various programs of the government to help people own a home, there are also housing tax benefits. This is created to encourage more buyers to own a property. Some of the tax provisions or subsidies of the housing industry is the tax deductibility of the interest of mortgages paid by homebuyers. They could deduct $1 million for mortgage loans and as much as $100,000 for home equity loans.
Moreover, housing taxes are also deductible together with points paid during closing for those buying a home for the first time. Nonetheless, there are several conditions that have to be met first. In most cases, capital gain tax exclusion is there when selling your property. While housing subsidies have helped many people realized their dreams of home ownership, many feel that subsidizing a big percentage of housing losses is actually inviting more problems later on. For this reason, housing tax subsidies should be reviewed carefully.
A major concern is the tax deductibility of the mortgage interest. Mortgage interest is predicted to cost the government a $600 billion estimates from the year 2009 to 2013. These figures are derived based on estimates the Joint Committee on Taxation. Another tax subsidy for housing that costs the government billions is the deductibility of real estate tax. Moreover, there is also the dismissal of taxes on funds received for selling a home. The combination of these items will cost the government a $20 billion estimate from 2009 to 2013. Those who support these subsidies state that these tax incentives help in increasing rates. Those who are opposed to the tax incentives believe that the breaks have helped misconstrue the prices of housing and have stripped the government of much needed income.
Some of the government programs that subsidized housing include the VA and FHA loans. An FHA loan is insured by the government to let people with low income to own a home. With the assistance of this agency, those with low income will have the chance to buy a house. In many cases, the down payment needed by a lender is waived and the rates of interest are lower. In case of default, the lender will turn to the government agency that insures the loan to recover unpaid mortgage. A VA loan is particularly developed to provide veterans and other qualified personnel an affordable way to own a house. This kind of loan is backed by the US Veterans Administration. All one has to do is to provide the documents needed to prove that he or she qualifies for the programs. The same as the FHA loan, the lender will go after the government agency in case of default.
