Roy Oppenheim’s commentary was originally published on Yahoo! Homes and is being republished on South Florida Law Blog with their permission.
There is a fair share of hyperbole and panic behind all the discussion about the fiscal cliff, whether it is real or just another made-for-TV drama a step away from a new “Real Housewives” spin-off. But that does not mean some of it is not justified.
The fiscal cliff contains many, many moving parts, which sometimes tend to get lost in a sea of white noise. But behind all the political grandstanding and theatrics, there are real Main Street issues at play.
Here is the reality. Regardless of what happens with the fiscal cliff negotiations, the real estate market is going to take a hit, particularly at the higher end of the market. It is just a matter of how substantial; whether it is a bump in the road or a major setback.
When it is all said and done, there will be some sort of tinkering or tweaking of the mortgage interest deduction that has become the vanguard of the real estate industry.
If in fact the deduction is eliminated, and taxpayers are unable to deduct their mortgage interest at all, as they are now for up to a million dollars of principal, the impact will be substantial on the real estate industrial complex, and it will place a drag on the gross domestic product.
That complex of course includes Realtors, lenders, developers, contractors, real estate attorneys, surveyors, plumbers, gardeners, and anyone else remotely involved, even people who sell furniture; and of course we can’t forget the banks who make the loans!