Maryland real estate agents and brokers braved the rain Wednesday in front of the State House to protest the governor's plan to cap mortgage interest deductions.
Some say a proposal making its way through the Maryland General Assembly to cap income tax deductions couldn't come at a worse time.
Despite a downpour, as many as 200 realtors from across Maryland gathered outside the statehouse in Annapolis Wednesday to draw attention to a bill sponsored by Gov. Martin O'Malley (D). They were concerned about part of the so-called Budget Reconciliation and Financing Act, which would reduce the state's mortgage interest deduction by 10 percent for individuals or couples who make $100,000 or more, and 20 percent for those who make $200,000 or above.
Real estate agents and brokers say the tax break from a mortgage interest deduction is a big reason why some buy a house in the first place, and capping it will injure the state's fragile housing recovery. Jim Scurvin, past president of the Howard County Realtors Association says it's just wrong to jeopardize an industry responsible for 49 percent of revenue that goes to state and local government
"When someone buys a house, on the average you employ two people, and you put $60,000 into the economy right then and there," he says. "Real estate is the lead when it comes to getting the economy moving again. We have the wind in our sails, the last thing we need is someone to knock the wind out."
The proposal is part of O'Malley's plan to close a $1 billion budget gap. State records show mortgage interest represents the largest portion of Maryland's itemized deductions.
Mary Antone, CEO of the Maryland Association of Realtors, says capping this incentive to homeownership will further retard the state's sluggish housing market.
"A devaluation, which is what would happen if you no longer have the tax benefit you thought you had when you bought the house, affects everyone," says Antone.
Tikkerea Winfield, spokesperson for O'Malley, says the governor is aware of their concerns: "We will listen to what they have to say because it's all part of our process," she says.
The proposed cap on the state's mortgage interest deduction would be the first such change in nearly 100 years.