Mark Stitham was born and raised in Dover-Foxcroft, so Maine was the obvious choice when he reached the point in his life that he could consider buying a second home.

Stitham, a psychiatrist whose primary home is in Kailua, Hawaii, bought a home in Cape Elizabeth in 1993. It serves as his family’s home base for visiting relatives, getaways to his siblings’ camp on Lake Sebec, seafood feasts and forays into Portland.

The Cape Elizabeth house would not have been within his means, he said, if it weren’t for the mortgage-interest deduction that he received — a deduction that Mitt Romney had talked about possibly eliminating or cutting back for high-income individuals.

“I definitely could not have afforded the home without a tax deduction,” said Stitham, who is in the fortunate position of having paid off his mortgage on the second home.

The idea of eliminating the mortgage-interest deduction for second homes is one that has great potential effect on Maine. The state leads the nation in terms of the percentage of its housing stock that is for seasonal, recreational or occasional use, according to the U.S. Census Bureau.

In Maine 16.4 percent of housing units — or 118,310 out of 721,830 — fall into that category, according to data from the 2010 census. The other northern New England states follow closely behind, with Vermont in second place at 15.6 percent and New Hampshire in third place with 10.4 percent. Nationally, the figure is 3.5 percent.

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Over the weekend, reporters overheard Romney make the remarks about ending the tax break during a fundraiser in Florida. The former Massachusetts governor did not say which tax brackets the proposal would affect. Since then, the candidate has passed up chances to clarify his remarks, and an aide said Romney was only discussing an idea.

Nonetheless, the possibility of ending the deduction has concerned some in Maine’s real estate industry.

“Real estate in Maine is not that great. Any attack on any of the incentives for people to buy homes — even secondary homes — would be a detriment to our real estate industry,” said Michael Baribeau, owner of Brunswick-based Century 21 Baribeau Agency.

It’s not clear how many potential sales could be affected, not only because of the uncertainty about which income brackets would be targeted but also because many home buyers don’t take out a mortgage.

Nationally, four out of 10 vacation homes are purchased with cash, said Walter Molony, a spokesman for the National Association of Realtors.

“It’s a bad idea. We oppose any changes in the mortgage interest deduction. It really is a bad signal, just as the housing market is trying to get on its feet,” he said.

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In 2011, the industry saw sales of vacation homes rise 7 percent to 502,000; but Molony notes that in 2006, the figure was 1,670,000.

Joyce Barter, a broker with Kranin Real Estate in Raymond and Naples, said that the higher the home’s price, the less likely the buyer will take out a mortgage. About 75 percent of the agency’s sales are waterfront or water-related properties, and Barter estimates that up to 80 percent of those are second homes.

In some cases, it just makes financial sense for the buyers to get mortgages even though they don’t need them, Barter said.

“The million-dollar properties and up rarely have a mortgage; and if they do, they are only getting a mortgage because it is a financially sound idea rather than they have to get a mortgage. They can borrow the money from somebody — the bank — and keep their cash somewhere where it’s going to earn more,” she said.

Maggie Kranin, the owner of the agency, imagines that the elimination of the deduction could slow down the economy in some areas.

“If you remove the interest on a second home, you’re cutting out a lot of incentive,” she said. “I think it would make a difference to some people. Obviously, a deduction is a deduction.”

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Scott Townsend of Keller Williams Realty, a Portland-based firm that specializes in Scarborough properties, notes that any removal of advantages will make people think differently about their investment decisions.

“A lot of second-home buyers are great contributors to the community,” he said. “If you look at it, they are paying the same real estate taxes as the people next door, but they don’t have the impact on our school systems, roads and other aspects of where our taxes go, like year-round residents.”

Baribeau said a big worry is that the elimination of the deduction for second homes could make it easier for policymakers to consider doing away with deductions for primary residences as well.

“I think the biggest thing we as Realtors would be concerned about is setting a precedent,” he said.

Democrats quickly accused Romney of telling his financial supporters plans he has yet to share with the public.

Last year, President Barack Obama proposed limiting mortgage-interest deductions at 28 percent for taxpayers in the 33 percent and 35 percent tax brackets, according to CNNMoney.


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