SmartMoney Blogs

Real-Time Advice
Our real-time advice on how market shifts and news impact you and your money

What Romney Plan May Mean for Homeowners

Getty Images

Could tax breaks for second-home owners be on the way out?

In a speech on Sunday, Mitt Romney, the presumptive Republican nominee for President, announced that he’s considering eliminating or limiting the mortgage-interest deduction for high-income individuals. Second homes, which include vacation homes and investment properties, accounted for 38% of home sales in 2011, according to the National Association of Realtors. Roughly 502,000 vacation homes and 1.2 million investment properties were sold last year. They have made up the largest chunk of home sales since 2005.

Scaling back or eliminating the mortgage interest deduction would hit some states harder than others: vacation homes are most popular in states like Colorado, Maine and Michigan, as well as Florida – a key swing state in presidential elections. The removal of this deduction could result in fewer sales there, which could hurt any recovery in housing, says Stu Feldstein, president at SMR Research, a housing and mortgage research firm. “It’s a bad idea for all markets right now – what little activity is left on home sales is highly dependent on investment homes,” he says.

A Romney spokesperson says “Governor Romney is discussing some of the ideas he has to tackle the big issues facing America.”

Lured by cheap selling prices and growing demand for rentals, a growing number of buyers have been purchasing second homes and renting them. Sales of investment properties spiked 64% last year. (Sales of primary residences, in contrast, fell nearly 16%.) By purchasing properties that would have otherwise languished on the market, experts say investors have helped the housing recovery and that removing incentives to buy could result in lower sales. For its part, the NAR says it’s against changes that would undermine current law.

To be sure, it’s unclear how many buyers would be impacted by such a change. Forty-nine percent of investment home purchases made last year were all cash – meaning the buyer didn’t use a mortgage and is therefore not receiving a mortgage interest deduction. Also, all-cash purchases accounted for 42% of vacation home sales. Separately, Romney stated that the change would be geared toward high-income earners, but didn’t provide details on how that group would be defined.

Still, the elimination of this deduction could impact investment properties, says Keith Gumbinger, vice president at HSH Associates, a mortgage-data firm. For investors with mortgages, this deduction helps to lower the cost of carrying the property, so eliminating the deduction would make it less profitable. If the existing tax perk was removed, it’s likely that buyers will make lower offers on investment properties to account for the tax savings that they’ll be losing, he says. Lower selling prices would bring down values of surrounding properties as well.

Vacation home sales might be less impacted by the removal of this deduction largely because these sales tend to be emotional buys, says Gumbinger. They’re homes to relax with family and potentially retire in, so for high-income earners the loss of the tax perk might not change their decision to buy, he says.

Nevertheless, the debate on mortgage interest deductions will likely intensify in the months leading up to the elections as presidential candidates outline ways to lower the country’s deficit. And experts agree that Romney’s proposal could survive because it targets a small group of people — the rich who are buying second homes with mortgages — and could be the first step in scaling back this much-debated tax perk.


We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (5 of 15)

View all Comments »
    • By WebOsPublisher

      gun bullet Vector. 3121696 – Collection of rifle bullets with drop shadow and light reflection. Affordable Royalty Free Stock Photography. Downloads for just $1.00,with thousands of images added daily. Subscriptions available for just $39.00. Our stock photo image search engine contains royalty free photos,vector clip art images,clipart illustrations.
      Clip Art Vector of gun bullet – Collection of rifle bullets with drop shadow… csp3121696 – Search Clipart, Illustration, Drawings, and EPS Vector Graphics Images JavaScript appears to be disabled – most features on Can Stock Photo will not function correctly.
      Not a member yet? Register | Sign In |
      Buy Images
      With Credits
      With Subscription
      Getting Started
      About Can Stock PhotoHow to Download PhotosBrowse Stock PhotosSell Your Images / Clips
      Download Images
      Buy CreditsBuy SubscriptionMy Downloads
      My Account
      Register NowLogin
      Discussion ForumsGalleries
      Vector – gun bulletCollection of rifle bullets with drop shadow and light reflectionNote : This purchase is a single image fileAdd to Favorites | Save CompSimilar Illustrations Stock Illustration Pricing Help Me ChooseFile Sizepixels | inches | cmUSDSmall JPEG11.1″ x 11.1″ @ 72 dpi28.2 x 28.2 cm @ 72 dpi800x800 px – 72 dpiUSD $2.50Medium JPEG5.3″ x 5.3″ @ 300 dpi13.5 x 13.5 cm @ 300 dpi1600x1600 px – 300 dpiUSD $3.50Large JPEG10.0″ x 10.0″ @ 300 dpi25.4 x 25.4 cm @ 300 dpi3000x3000 px – 300 dpiUSD $5.00X-Large JPEG13.3″ x 13.3″ @ 300 dpi33.9 x 33.9 cm @ 300 dpi4002x4002 px – 300 dpiUSD $6.00EPS VectorScalable to any sizeUSD $10.00Licensing, Prints $ Other Options Learn MoreView Options Standard Licensing TermsIncluded Multi-Seat (Unlimited Users)USD $25.00 Reproduction / Unlimited Print RunUSD $50.00 Physical and Electronic Items for ResaleUSD $50.00 Image Resizing $ Cropping ToolUSD $2.00 Get this Image as a Print / PosterTotal: 0I accept the License TermsWant to pay less for Stock Images?Save 50% when you buy with credits!More InfoStock Illustration InformationImage ID:csp3121696Uploaded by:NicemonkeyDate Added:2010-02-02Popularity:1 Downloads, 1,234 ViewsTitle:gun bulletKeywords:bullet, rifle, round, gold, ammunition, army, arsenal, caliber, cartridge, gun, handgun, hunting, lead, military, shell, silver, slug, weapon, illustration, shrapnel, shadow, collection, set, stock illustration, royalty free illustrations, stock clip art icon, stock clipart icons, logo, line art, EPS picture, pictures, graphic, graphics, drawing, drawings, vector image, artwork, EPS vector arthelp contact usInternational Sites Australia Austria Belgium Brazil Canada China Czech Republic Denmark France Germany Greece Hong Kong Hungary Ireland Israel Italy Japan Luxembourg Mexico Netherlands New Zealand Poland Portugal Singapore South Korea Spain Sweden Switzerland Taiwan United StatesWant more information?LegalAbout Can Stock PhotoPrivacyFeedbackTerms $ ConditionsContact Us Search Can Stock Photo for royalty free illustration, royalty free clipart, digital artwork, EPS vector clip art, stock illustrations, stock images, logo icon graphics, and cheap EPS format line art drawings. Can Stock Photo has the royalty free illustration, line art drawing, EPS vector graphic, or stock clipart icon that you need. Our designers and illustrators provide royalty free stock images, clip art, clipart graphics, and pictures for as little as 1 dollar. Buy photographs and get immediate image file downloads or subscribe for a low monthly fee. Can Stock Photo also offers stock photos, royalty-free stock photography images, stock footage, and video animation clips.© Can Stock Photo Inc., 2012-12-08 Shopping Cart: 0 Item Items _gaq.push(['_trackPageLoadTime', "/" + "csp" + "/" + "file_view" + "." + "php"]);_gaq.push(['_trackPageview', "/" + "csp" + "/" + "file_view" + "." + "php" + "?" + "id=3121696" + String.fromCharCode(38) + "cspkwc=23"]);(function() var ga = document.createElement(‘script’); ga.type = ‘text/javascript’; ga.async = true;ga.src = (‘https:’ == document.location.protocol ? ‘https://ssl’ : ‘www’) + ‘.google-analytics.com/ga.js’;var s = document.getElementsByTagName(‘script’)[0]; s.parentNode.insertBefore(ga, s);)();

    • By WebOsPublisher

      Freebies offers freebies,free stuff,counters,trackers,guestbooks,graphics,freeware,games,shareware,E-mail services,fonts
      Freebies: Free, graphics, free stuff, freeware, icons, backgrounds, patterns, buttons

      (function(isV) {
      if (!isV) {
      //this.lycos_search_query = lycos_get_search_referrer();
      var adMgr = new AdManager();
      var lycos_prod_set = adMgr.chooseProductSet();
      var slots = ["leaderboard", "leaderboard2", "toolbar_image", "toolbar_text", "smallbox", "top_promo", "footer2"];
      var adCat = this.lycos_ad_category;
      adMgr.setForcedParam(‘page’, (adCat && adCat.dmoz) ? adCat.dmoz : ‘member’);
      if (this.lycos_search_query) {
      adMgr.setForcedParam(“keyword”, this.lycos_search_query);
      else if (adCat && adCat.find_what) {
      adMgr.setForcedParam(‘keyword’, adCat.find_what);
      for (var s in slots) {
      var slot = slots[s];
      if (adMgr.isSlotAvailable(slot)) {
      this.lycos_ad[slot] = adMgr.getSlot(slot);
      }((function() {
      var w = 0, h = 0, minimumThreshold = 300;
      if (top == self) {
      return true;
      if (typeof(window.innerWidth) == ‘number’ ) {
      w = window.innerWidth;
      h = window.innerHeight;
      else if (document.documentElement && (document.documentElement.clientWidth || document.documentElement.clientHeight)) {
      w = document.documentElement.clientWidth;
      h = document.documentElement.clientHeight;
      else if (document.body && (document.body.clientWidth || document.body.clientHeight)) {
      w = document.body.clientWidth;
      h = document.body.clientHeight;
      return ((w
      #body .adCenterClass{margin:0 auto}
      Close Ad
      Sponsored by
      Graphics Resources
      Factory – There’s
      over 19,000 original 3D animated GIF files, all
      nicely organized by category at this awesome
      site. These graphics are available for free for
      use on noncommercial Web pages. Categories
      include bullets, buttons, alphabets, characters,
      office, flags, foreign languages, holidays,
      music, sports, transportation, Web elements and
      more. The best collection of its kind on the Web.
      – With a domain like
      "FreeGraphics.com," this site has a lot
      to live up to. And Claire Schaefferit’s site
      delivers quite nicely: it’s a well-organized,
      searchable database of free graphics links.
      Graphics include buttons, bullets, control
      panels, bars, sets, backgrounds, animations, and
      more. All sites are rated and reviewed.
      Icon Archive – A comprehensive archive for free
      graphics on the Web. Includes animations,
      backgrounds, balls, bars, lines, clip art and, of
      course, icons. There’s also helpful pointers to
      other graphics resources on the Web.
      Icon Archive – Here’s a cool collection of useful
      and funny free Web graphics. Leo serves up
      thousands of icons, caps, lines, flags, markers,
      bullets and original work. Categories here
      include such topics as Mozilla icons,
      butterflies, "welcome signs," and
      "construction signs."
      Photo Gallery – This is a nice collection of
      "real-world-derived" images. Categories
      include food $ drink, math, medicine $
      health, natural science, flowers, textures $
      surfaces, office motes, pasta, people, places,
      cactus, toilets, greenery and much more.
      Thumbnail images are provided for all images for
      rapid searching. Free for personal and commercial
      use, but check the conditions.
      – A handy free
      service, GifOptimizer will reduce the size of any
      GIF image up to 75 percent. You can reduce either
      GIFs that are online or those that are on your
      hard drive. Works with animations, too.
      Archive – A
      nicely-designed free graphics resource, Cool
      Archive offers thousands of categorized icons,
      animations, buttons, bullets, backgrounds, bars,
      arrows, and fonts. Coming soon: Photoshop
      Warehouse – There
      is a wide range of free graphics available for
      Webmasters at this site. Goodies include:
      animation, spheres, separators, icons, bars,
      bullets and more. Graphics topics include:
      Fantasy, Fruit, Flowers, Logos, Military,
      Mozilla, E-mail, Cartoons, Flags, Sports, Texas,
      Holidays and Chrome. Tell Matrix we sent you.
      Connection – Like
      the title says, this unique free graphics site
      offers a big roundup of letters (as well as
      numbers and punctuation signs). Currently, they
      have 10 animated alphabets and 30 static ones.
      Everything is neatly organized, so you can find
      what you need, quickly.
      Online Logo Generator – This free service will let you
      easily create cool customized logos online. Just
      choose your text preference, your font and the
      colors and this service will generate your
      graphic quickly. Great for many uses: custom
      wallpaper, Web sites, etc. Note: this
      service is quite popular and as a result can be
      difficult to access at times.
      Wallpaper – Tired
      of looking at the same old desktop? Then click on
      over to this breathtaking free collection of free
      wallpaper images. Categories include
      "Metal," "Glassy,"
      "Lights," "Sci-Fi,"
      "Water," and our favorite,
      "Nature." A most impressive collection
      of digital art from Germany.
      Graphics – A
      free graphics resource that offers plenty of free
      graphics for your Web site. Categories include
      shadow effects, background sets, welcome signs,
      home page signs, guestbook buttons, static $
      animated buttons, bars, lines, bullets, balls,
      backgrounds and more. Free custom graphics also
      ‘n Schemes -
      Great site for free Win 95 themes. Customize your
      desktop to your own taste, from a
      "Retro" look to something out of the
      Starship Enterprise. Theme categories here range
      from animals to TV to seasonal stuff to horror.
      And no, you don’t need Microsoft Plus! to use
      these themes as there’s a freeware program called
      Free Themes that’ll install themes on your
      system, which you can get here.
      – A new graphics site
      that formerly went under the name Global Design,
      this site serves up a good selection of free
      graphics for most needs. There are buttons,
      banners, animations, and more, as well as an
      always-interesting "Daily Graphic."
      There’s also a selection of "remote
      controls" and interfaces that visitors can
      use to navigate your site.
      Web Graphics – This site offers many free graphics,
      suitable for Web pages. Categories include 3D
      balls, 3D bullets, arrows, backgrounds, banners,
      bar lines, buttons (small $ large). They’ll
      also customize the graphics for you (limit one
      per visitor).
      Banner Generator- If you subscribe to a banner
      service, you’ll need to make up a banner, which
      this site provides for free. Check out these examples. Note: WebTV
      users may use The Banner Generator. Go here for details.
      Heaven – This
      site lives up to its name. There’s over 350
      background graphics here, so you’re bound to find
      something that’s appropriate for your Web site.
      There’s a nice preview function and you can view
      thumbnail images of each background.
      Mouse Free Graphics – This free graphics site excels with
      its offerings of free backgrounds, buttons and
      lines. Goodies on tap here include dark $
      light backgrounds, embossed backgrounds, buttons
      (rectangular, round and odd-shaped) and more.
      Free Custom Desktop Themes – These folks will make a
      custom desktop theme for you. Just give them a
      few simple details (such as background image,
      sounds, screen saver and fonts) and they’ll
      create it for you.
      Graphics – Here’s
      the deal: William will designed a free custom
      graphic for you if you display his banner on your
      page. He offers free 3D and 2D graphics, as well
      as animations.
      T $ P
      SC Free Web Graphics – T $ P SC, the screen saver people, now have an
      up-and-coming original free graphics site. Here,
      you’ll find background sets, separators, animated
      E-mail images and more.
      HVS GIF Cruncher – If you run a Web site, you
      should make sure that your images load as quickly
      as possible. This free online tool lets you
      easily shrink the size of your GIF images, by up
      to 90 percent, for faster loading. (It’s similar
      to the excellent GIF Wizard, which was once free, but
      now charges). Better hurry on this one, it won’t
      be free forever.
      – An excellent
      resource for free desktop "themes"
      (which you can use to give your Windows desktop a
      customized look). This site has over 2,600
      themes. Categories include animals, anime, art,
      cartoons, computers, games, holidays, horror,
      movies, music, nature, people, places, sci-fi,
      sports, TV, vehicles and more.
      Free Grafix – Here’s
      a nice free graphics site with plenty of goodies
      to spice up your Web pages and presentations.
      Examples include Metallic Textures, Gold Edge
      Shapes, Fuzzy Shapes, Third Shift Animations,
      Floral Borders and more. Categories include
      textures for backgrounds, buttons, rules, balls,
      shapes and animations. There’s also an
      "Animation of the Week."
      UFOs Graphics Mania – This site offers plenty of free
      graphics, including buttons, bars, matched
      graphics sets, and a free header and logo
      creation service. They don’t do banner exchange
      graphics, but they do offer nice page headers,
      awards, etc. matched to the requester’s Web
      pages. Turnaround time is "roughly 10
      minutes to 24 hours." They have a nice free
      font selection, too.
      ZyGraphics free graphics services – ZyGraphics lets you create
      you own personalised graphics for your site. No
      graphic or artistic design experience is
      required. ZyGrahpics allows a near infinite range
      of high quality text and 3D graphic headings to
      be produced in seconds.
      Animations Paradise – This German site offers more than
      1,500 free GIF animations, conveniently broken
      down by category. The graphics are optimized for
      faster loading. The site has a helpful search
      engine to help you locate what you need.
      Blasphemy – If
      you’re getting tired of looking at Windows’ lame
      default wallpaper, then click over to artist Ryan
      Bliss’ site for an awesome selection of free
      wallpaper art. There’s all kinds of eye-popping,
      original images here, including surreal images,
      lovely outer space scenes and abstract stuff.
      Sample images from Task Force Clipart – Here you can download
      graphics, multimedia samples, patches and more.
      There’s icons, bullets, bars, animated GIFs for
      PC users and lots of full-color EPS images for
      Mac users.
      freeimages.com – This is an impressive collection of
      free graphics on the Web. freeimages.com features
      all-original clipart, including backgrounds,
      buttons, icons, bars, and digital art. There’s
      also a cool "Digital Images" collection
      that features eye-catching art in unique
      categories, including "Aliens $
      Spaceships," "Creepy Crawlies,"
      "Frost $ Fire,"
      "Spirals," "Dark Fantasy,"
      and more.
      KorCar Graphics – Free bars, bullets, buttons and
      backgrounds. Also offers free animated and static
      banners (a must if you’ve signed up for a banner service to promote your site).
      Art Attack -
      Andy Evans’ 300-plus page site offers resources
      for free and original GIF animations, buttons and
      backgrounds, as well as HTML tips. A mind-blowing
      site, with some of the most creative art that
      we’ve seen anywhere. Andy also serves up tips for
      using Adobe Illustrator and Photoshop. Also be
      sure to check out the "Daily Download"
      which serves up a different button, animation or
      counter digit each day.
      ASCII Art Gallery – Here’s a graphics site with a twist:
      it features ASCII art only. Now, I hear you
      saying, "But ASCII art is boring!"
      Well, obviously you haven’t viewed the
      masterpieces that Joan Stark has turned out.
      There’s some pretty amazing stuff here, available
      for "personal use." Categories include:
      cartoon characters, animals, seasonal items,
      animations (!) and more.
      Eirin’s Gradient Backgrounds – If you’re looking for
      gradient backgrounds (those that fade from one
      color into another), this is the place to go.
      This site contains contains red, dark blue,
      purple. light green, yellow, and orange
      backgrounds. Each gradient color background is
      sampled in a .GIF format.
      The Doodle-Kids Page – This site offers free original Web
      graphics for children’s (or grownup’s) pages.
      There’s a nice selection of animated words (signs
      and banners), animated people and cyberpets,
      angels, animals and custom graphics. They also
      offer matched background sets, sample Web site
      graphics idea pages and an image search engine.
      Bonedanz Graphics – This site features hundreds of free
      unique and unusual Web page backgrounds. Many of
      these images also look fine when displayed as
      desktop wallpaper, when tiled. Bonedanz also
      offers animated buttons, 3D buttons and more.
      Graphics on a Budget – A helpful site that offers
      tuturials on using Paint Shop Pro. Learn how to make
      backgrounds, fancy text, buttons, frames for
      graphics and more, just like the pros.
      Octagamm’s Ball Boutique – A good resource for spheres,
      orbs, round things, alphabets, animations,
      backgrounds, ovals and cubes, buttons, words and
      more. Intended for use in noncommercial pages.
      Cats ‘n’ Kittens’ Designs – Do you like cats? Here’s a
      nice collection of free feline-related graphics.
      Many of the images have been "adapted"
      from stickers, old postcards and children’s books
      or clipart.
      Xoom Web Clip Empire – Over 50,000 free animated GIFs,
      buttons, bullets, backgrounds, textures,
      3D-icons, photos, sound effects, photos, music
      clips, and vector clips (EPS and WM).
      netCREATORS Icon Page – Featuring over 230 animated GIFs,
      and a total of 720 images. Categories include 3D
      objects, cartoons, "Under Construction"
      icons, page dividers, E-mail icons, text
      animations, human-related icons, backgrounds,
      balls, bars and much more.
      Wallpaper Madness – This site is offering free Windows
      wallpaper. Categories include sports and cinema.
      Free Backgrounds – Lots of great backgrounds here from
      the talented Renee. They’re 256 x 256 pixels in
      size and are in JPG format.
      Jack’s Graphics – This site offers free original Web
      page backgrounds and textures, as well as a
      contest to win free custom graphics and photo
      Aviation Animation – If you’re interested in animated
      graphics with aviation themes, this is the place
      to go.
      The Digital Alchemist – Lots of resources here, including a
      Bryce gallery, free original animated gifs, photo
      restorations, links and more.
      Jason’s Animation Outpost – Comprehensive free graphics
      animations site, with lots of content organized
      by categories, which include animals, people,
      buttons, bars, arrows, balls, cartoons,
      construction, email, space, signs, vehicles, new,
      welcome, other, 3D, neon and holiday-related
      Animation Library – Lots of graphics goodies here,
      including arrows, bars $ lines, bullets, cats
      $ kittens, dogs, computers, counters, E-mail
      icons, smiling faces, "under
      construction" signs, the word
      "new," welcome signs, etc.
      Alien Cursor Page – Animated Alien-themed cursors for
      Windows 95. Liven up your hourglass with this
      cool freeware.
      Animation City – Free image, word and wire frame
      animations here. Cool stuff.
      Pattern Land – - Over 500 background patterns for
      your Web pages. Fully tiled pages available for
      each image. Wide selection.
      Get a Byte Graphics – Lots of backgrounds here for your
      Web site from Jennifer Johnson. Also Web
      designers’ resources.
      World – This
      is a helpful site for Web page designers and
      serves up plenty of free graphics. Images are
      arranged by category and include: animals,
      backgrounds, business, city, food, holiday
      themes, household, insects, interfaces,
      landmarks, music, recreation and technology.
      Free Web
      Graphics by Pam Bytes – This site has a big collection of
      free and ORIGINAL Web graphics and is constantly
      updated. Here you will find backgrounds, buttons,
      texture fills, banners, page themes and border
      patterns. Currently there are over 1000 images.
      There’s also tuturials on topics such as
      "How to add text to buttons with Paint Shop Pro."
      Clip Art – Helpful
      clip art resource, with a handy search engine to
      help you find what you need. There’s also a cool
      animated GIF section. While you’re there, get
      yourself a free animated mailbox with your name
      on it!

    • This article is not completely accurate. It implies that rental homes or homes purchased for investment purposes would be affected by this possible change. Rental homes would not be considered a “second home” subject to this change – they are in a different category under tax laws than a second home used as vacation property. Homes bought as an investment and not for personal use are also in a different tax category. On my local radio station, I heard one of your representatives discussing this subject, and she also talked about people buying multiple homes. The only personal home interest currently deductible is for one second home, not multiple additional homes. I can’t help but wonder if the two errors were politically motivated. The target of the change is not rental or investment properties, and to construe it that way is irresponsible.

    • I’ve always though mortgage deductions for secondary home did not make much sense. I was an unfair tax brake because it was only available to the wealthy who could afford it and decided that they wanted a government supported perk and a subsidy to boost the construction industry.
      Tax simplification means that even favored perk should be cut to make taxes even across similar levels of income and government subsidies are not hidden in the tax code.

    • Most high net worth individuals will buy a second or third property with cash anyway so the elimination of the mortgage deduction for these type of investors will be a non event.

About Real-Time Advice

  • How breaking news — in the markets, Washington, and around the world — affects you and your money. Have a question about how current events may change your financial future? Email us at ask@smartmoney.com.