Three thousand square feet

That could be the threshold after which homeowners start to lose their mortgage interest deductibility. Michigan’s Representative John D. Dingell’s bill would (no longer available):

Phase out the mortgage interest deduction on large homes.  These homes have contributed to increased sprawl and longer commutes.  Despite new homes in and of themselves being more energy efficient, the sheer size, sprawl and commutes lead to dramatically more energy use – or to put it more simply, a larger carbon footprint.

He has a point. This is an interesting interview with him at the WSJ.

Specifically, the proposal:

Phases out the mortgage interest on primary mortgages on houses over 3000 square feet.
Exemptions for historical homes (prior to 1900) and farm houses.
Exemptions for home owners who purchase carbon offsets to make home carbon neutral or own homes that are certified carbon neutral.

An owner would receive:
– 85% of the mortgage interest deduction for homes 3000-3199 square feet
– 70% for homes 3200-3399 square feet
– 55% for homes 3400-3599 square feet
– 40% for homes 3600-3799 square feet
– 25% for homes 3800-3999 square feet
– 10% for homes 4000-4199 square feet
– 0 for homes 4200 square feet and up

For a summary of the bill, go here (no longer available).

Hmmm …

3,964 single family homes have sold in the region* since 1 January 2006. Of these, 667 are marked as being new construction. ** 166 have more than 3,000 finished square feet – nearly 25%. Nearly 25% of all new homes in the region would be affected in some way by this new bill.

Taxes are one of the most effective ways to influence public policy and citizen behavior. Rather than debate the intricacies of the bill, my question is this – is the premise correct? Should there be a consumption tax for those who choose to live in larger homes?

Is this the best way to influence change?

In researching this post, I came across something new – Location-Efficient Mortgages (archived: 2024) (hat tip:Climateprogress). Might Belvedere be a candidate for this type of mortgage?

The Location Efficient Mortgage®‚ (LEM) is a mortgage that helps people become homeowners in location efficient communities. These are convenient neighborhoods in which residents can walk from their homes to stores, schools, recreation, and public transportation. People who live in location efficient communities have less need to drive, which allows them to save money and improves the environment for everyone.

*Region = Charlottesville, Albemarle, Fluvanna, Greene, Nelson.
**New construction MLS data is notoriously unreliable, but does serve as a good guide