TOPEKA, Kan. — The State of Kansas is looking at a budget deficit of nearly $300 million, but Governor Sam Brownback is proposing a controversial way to help close that gap – and it could mean getting rid of a tax break that’s near and dear to homeowner’s hearts.
The governor proposes eliminating the mortgage interest deduction tax break for homeowners. According to the state, about 317,000 Kansas residents take advantage of the break when they file their taxes – the average benefit is worth nearly $400, and it costs the state around $162 million in revenue each year.
Supporters of the plan say that if the governor’s overall plan to continue cutting the state’s income tax becomes reality, then the mortgage deduction becomes less important for homeowners. But real estate agents say that buyers across all price ranges and income brackets have come to depend on the deduction.
“The housing market is still so fragile and we’re just starting to see it recover and come back,” said real estate agent Stacy Curtis. “I think that would set it back. It would be a big deteriment to the buyer and a seller.”
Mortgage banker Gary Lerner, who has been in the mortgage business for 25 years, says that he fears the cost to the state’s economy if the deduction disappears.
“You’re talking about builders that aren’t going to sell as many homes,” said Lerner. “I think you’d see people not wanting to. What’s the difference between purchasing a home or renting if you’re going to get no deduction?”