Mortgage Interest Deduction Faces Scrutiny
Posted at 12:45 p.m. on Nov. 28, 2012
“Many home buyers deduct their mortgage interest when assessing their tax bill, a perk that has helped bolster the income of millions of families… But as President Obama and Congress try to hash out a deal to reduce the budget deficit, the mortgage interest deduction will likely be part of the discussion,” according to NYT DealBook.
“It is likely that any caps would be structured to aim at high-income households, and would diminish or end the mortgage tax break for many of those taxpayers… One of the reasons the mortgage tax break is so vulnerable is that both Democrats and Republicans have recently favored capping deductions.”
“One argument against curtailing the mortgage deduction is that it could reduce demand for housing, depressing home prices when the housing market is still somewhat weak… With several forms of government subsidy also supporting housing, it’s hard to single out the effect of the mortgage deduction. At the most, the Reason Foundation estimates, the deduction may bolster house prices by 3 percent.”