This bill has critical blank areas so no one really knows how much it will affect their tax base. It limits, for purposes of personal income taxation, amount of allowed mortgage interest deduction. It actually allows the deduction over XX amount, which means it’s a wealthy homeowner deduction, but eliminates the tax for “affordable” housing. Fifty percent of the estimated increase in taxes will go into the Oregon Housing Fund to establish the Oregon First-Time Home Buyer Account for initial costs of purchasing a first home.
In addition, there is allowed a credit against the taxes that are otherwise due under ORS chapter 316, in an amount equal to XX percent of the purchase price of a home that is purchased by first-time home buyer, and used as the principal residence. For a taxpayer to be eligible:
(a) The taxpayer must occupy the home at least 360 days of the tax year; (that means no tax credit for partial years and you have to live there longer than a year) and
(b) The federal adjusted gross income of the taxpayer may not exceed $150,000 on a joint return or $100,000 on any other type of return. Credit is limited but can be carried forward three years. This credit applies to tax years beginning on or after January 1, 2024, and before January 1, 2028.
Establishes Task Force on First-Time Ownership to study methods for providing assistance with initial financial requirements for first-time home buyers, focused on down payment and closing costs.
The bottom line is that it is redistribution of wealth robbing the middle-class of their mortgage interest deduction to fund a lower income home buyers program. Lower income home buyers are trading their mortgage interest deduction against taxes for lifetime of the loan (if qualified to itemize) for a one-time (maybe larger) credit that can be spread over three years. Not to mention how many state employees it will take to administer the new program.
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