President Obama's had proposed to shrink deductions for real-estate taxes, mortgage interest, charitable contributions and other items for married couples with annual incomes of more than $250,000 or individual filers earning more than $200,000 in his latest budget proposal. As per the new proposal, the taxpayers would be able to save 28 cents of tax liability for every $1 of mortgage interest. Till date it was 35 cents for every $1.

However, this proposal has not gained much ground in Congress. Opposition as well as the ruling party members are concerned about how it would affect the housing market and charitable contributions. The real-estate industry experts are of the opinion that reduction in tax deductions would hurt the demand for housing at a time when the market still remains weak.