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Facts on the Mortgage Interest and Real Estate Tax Deductions in Virginia

Home/Recent News/Facts on the Mortgage Interest and Real Estate Tax Deductions in Virginia

Facts on the Mortgage Interest and Real Estate Tax Deductions in Virginia

Of the approximately 2,015,000 owner-occupied houses in Virginia in 2014, 1,408,000 or 70% had a mortgage.

In 2014, 1,127,300 taxpayers in Virginia claimed a deduction for mortgage interest (MID). The total amount deducted was $11,578,681,000. This means that the average taxpayer claiming the MID subtracted $10,250 from taxable income in 2014 as a result of the MID.

At a marginal rate of 25 percent1, this means that the average taxpayer saved $2,570 in taxes as a result of the MID. The total tax savings from the MID in Virginia in 2014 was $2,894,670,250.

In 2014, 1,254,400 taxpayers in Virginia claimed a deduction for real estate taxes. The total amount deducted was $4,924,078,000. This means that the average taxpayer claiming the real estate tax deduction subtracted $3,950 from taxable income in 2014.

At a marginal rate of 25 percent2, this means that the average taxpayer saved $ 980 in taxes as a result of the real estate tax deduction. The total savings from the real estate tax deduction in Virginia in 2014 was $1,231,019,500.

If the MID and real estate tax deductions were eliminated, the loss would not be a one-year event; homeowners lose out on these potential savings each and every year. The present value3 of these lost savings could total $105,786,916,700. The value of all owner-occupied real estate in Virginia in 2014 was $637,243,672,200. If the lost tax savings are fully capitalized into the price of houses, the average decline in value in Virginia could be 17%. From the individual perspective, the median priced home in Virginia in 2014 was $326,800. A decline in value as projected could mean a loss in home value of $54,250 for the typical home owner.

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1 Marginal rates range from 10 to 35 percent.
2 Ibid.
3 Present value calculation assumes 3.9 percent discount rate and 1000 year time horizon.
Sources for the data above include: Internal Revenue Service 2014, American Community Survey 2014, National Association of Realtors® 2014; All calculations are by the National Association of Realtors® Research Division, July 2017.

 

 

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By | 2017-10-24T14:30:08+00:00 October 24th, 2017|Recent News|0 Comments

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