Of all the deductions woven into the sprawling U.S. tax code, few have been more fiercely guarded than the enormous tax break that lets homeowners deduct the interest they pay on their mortgages.
But as Congress and the White House negotiate the first major rewrite of tax laws in decades, changing the generations-old mortgage-interest deduction — which costs the government roughly $100 billion a year — has gone from far-off possibility to part of the conversation.
The outcome of that debate could have profound long-term effects on homeowners across the country — and particularly those in the Washington area, who tend to benefit from the tax break more than many other Americans due to the region’s hefty home prices and high incomes.
As the Obama administration and lawmakers on Capitol Hill scramble to defuse automatic spending cuts and tax increases set to take effect Jan. 1, a herd of sacred cows — from Social Security and Medicare to deductions for charitable giving and mortgage interest — are in danger of losing their untouchable status.
The weary apartment hunters of Washington, who have been plagued in recent years by rising rents, fewer vacancies, pickier landlords and periodic bidding wars, are about to get a welcome respite.
Thousands of new rental units under construction are scheduled to open in the coming months, the first such wave of new building in the area since the financial crisis hit in 2008.
The coming surge — which includes a whopping 6,000 new units by the end of this year — will give prospective renters a slew of new options and could even halt the upward march of monthly rental payments, according to developers, analysts and real estate professionals.
“There’s going to be a paradigm shift,” said Rick Gersten, chief executive of Urban Igloo, a company that helps connect renters with local landlords. “People are going to have more choices. It’s going to be more difficult to retain tenants.”
During the economic downturn, developers drastically scaled back production of multi-family projects. But construction came roaring back last year, with developers breaking ground on nearly 15,000 apartment units from Landover to Northeast Washington to Manassas — the most in nearly two decades, said Greg Leisch, chief executive of the Alexandria-based research firm Delta Associates.
WELCOME BACK, D.C., it’s good to hear from you. By now, hopefully, you and your neighbors in the mid-Atlantic area are back online after last month’s violent storms left about 3 million people in the dark and, with downed power lines and fallen trees, delayed the restoration of power. Since then, to catch you up, Tom Cruise’s Oprah couch-jumping testament to love was put in a new light when Katie Holmes filed for divorce; CNN’s Anderson Cooper came out of the closet to a worldwide yawn; and the nation celebrated its independence from an unresponsive and monopolistic source of power (and it wasn’t the electric utilities).
The ongoing power outages are an epic failure, however, not only for those who suffer in the heat but for the rest of the nation and the world looking on, aghast. That our capital is in the dark is akin to riots in London or debilitating strikes in Paris. It says something about a nation whose projection of strength is an essential part of its security strategy. There is little national power with no power in the nation’s capital.
There are a lot of excuses coming from Pepco and Old Dominion Power, the local utilities that distribute electricity to the Washington area. Deregulation in the industry was supposed to provide customers with more responsive service and lower prices. It has instead resulted in less oversight, allowing for degradation in equipment in the transmission and distribution networks, and fewer employees available to respond.
The problem is the persistent dependence on above-ground lines, which are easily downed by winds or tree branches that fall during a storm. The utilities have consistently fought regulations to require burying power lines, which occurs in most of the world, claiming that in D.C. alone, the pricetag would be close to $6 billion.