Like all Americans, we believe in opportunity and the ability to live the American Dream. Owning a home is key to achieving that dream. Since the recession, Maine residents have struggled to recover and see economic growth in their local communities.
One of the most critical economic issues we face today is the strength of the housing market. A healthy housing market equals a healthy economy. Homeownership is the backbone of the economy, a driving force for jobs, strong communities, stable neighborhoods and families. Recently, we’ve grown concerned about the latest budget proposal and the instability it would bring to the housing market if passed.
This week, lawmakers in Augusta are considering a move to eliminate the state mortgage interest and property tax deductions. We believe this is misguided and, sadly, another attempt to raises taxes on Maine residents.
Eliminating deductions for mortgage interest and property taxes would make it harder to own a home and force homeowners to pay more in taxes. For those who own homes, if the proposed budget is signed into law, they would face a potential impact of a decline in home value of at least $6,900 (for the typical homeowner). For those looking to enter the market, the purchase of a home will become a less attractive, more expensive investment without the ability to factor in these deductions.
The fact that the purchase of a home gives something back to the purchaser in the form of deductions for mortgage interest and property taxes is a powerful incentive and makes home ownership an attractive investment. Take that incentive away and what makes an apartment dweller decide to take the plunge into homeownership?
If this proposal becomes law, homeowners would not just face the elimination of the state mortgage interest and property tax deductions; it also increases sales tax on all professional services. This is especially dangerous because home sales are vital to our economy and job growth. For every home sold in Maine, an additional $25,600 is spent on ancillary services and products. This equates to one job for every two homes sold in Maine.
Currently, 72 percent of Maine residents own their homes, and 75 percent of those have, at some point, used the itemized state mortgage interest or property tax deductions.If these hurdles to the American dream are enacted, the cost of purchasing a home will surely increase and fewer home sales are due to follow. As homeownership becomes less attainable for Maine residents due to these new taxes, Maine’s economy will suffer.
During our time serving in diverse roles, whether it is involvement with the region’s chambers of commerce or as agents assisting those in the housing market, we’ve learned many valuable lessons, the least of which is that a home is more than just a house. They’re places where families are formed, memories are built and dreams are achieved. Having a front-row seat watching Maine residents enjoy upward mobility has been satisfying to each of us. We ask lawmakers to keep homeowners on their minds and urge constituents to contact their elected officials and ask that they retain the mortgage interest and property tax deductions so critical to our economy and Maine’s middle class. The American Dream is too important to do otherwise.
Andy Hamilton is chair of the Economic Development, Environmental and Land Use, and Municipal Law and Finance practice groups at Eaton Peabody in Bangor and a board member of the Bangor Region Chamber of Commerce. Angelia Levesque is sales director with Better Homes and Gardens/The Masiello Group in Bangor and the former president of the Maine Association of Realtors.