Oh - I agree, some will pay more and some will pay less - it won't be an exact match.
I do have some questions about housing myself... ie, they say no tax on used goods. Would that apply to a pre-owned house that you buy? Would current mortgage be exempted from the new tax, since the purchase was already made? Dunno...
I suspect that higher-wage homeowners who itemize will probably pay a higher amount under the new system, but it will allow lower-wage potential homeowers to buy a house. Being in the prior category, I think I'm comfortable with that.
My parents had a mortgage most of their life and never itemized since they didn't make enough for it to be benficial - those type would make out better.
What about the home mortgage deduction? The FairTax has positive effects on residential real estate far beyond this narrow question.
Today?s homeowners, if they itemize (and 70% do not), pay their interest with post-Social Security/pre-income tax dollars. They then pay their principal with post-SS/post-income tax dollars. Those who do not itemize get no advantages at all. Under the FairTax, all homeowners make their entire house payment with pre-tax dollars.
With the FairTax, mortgage interest rates fall by about 25 percent (about 1.75 points) as bank overhead falls; this is a huge savings for consumers. For example, on a $150,000, thirty-year home mortgage at an interest rate of 7.00 percent, the monthly mortgage payment would be $999.12. On that same mortgage at a 5.25 percent interest rate, the monthly payment would be $830.01. Over 30 years, the 1.75-percent decrease in interest rates in this instance would result in a $60,879 cost savings to the consumer.
Finally, first-time buyers save for that down payment much faster, as savings are not taxed.
Under the FairTax, home ownership is a possibility for many who have never had that option under the income tax system. Lower interest rates, the repeal of the income tax, the repeal of all payroll taxes, and the rebate mean that people have more money to spend, and have an increased opportunity to become home owners.