Tax Week: The Mortgage Interest Deduction


As tax filing season comes to a close, now is a good time to take a look at some of the basic facts concerning the mortgage interest deduction (MID). As homeowners past and present know, the MID is a cornerstone of American tax and housing policy. Broadly claimed, the deduction facilitates homeownership.  A few facts about the MID from 2010 data:

  • The MID benefitted 33.7 million homeowning households for a total savings of $82.7 billion
  • Two-thirds of the tax benefit was collected by households earning less than $200,000 in economic income
    • Household income is the sum of all income earned by individuals filing on the same tax form (e.g. two married adults); economic income includes items like employer-paid payroll tax and health insurance
  • For households earning between $100,000 and $200,000, the average tax savings was more than $2,500

In past analysis, NAHB has demonstrated that historically more than 85% of mortgage interest paid is claimed as a deduction on Schedule A. That is, most people paying a mortgage are in fact itemizing taxpayers.

And the largest benefits as a share of household income, are typically for younger households, who are paying mostly interest in the early years of a mortgage.

Despite some proposals to curtail or the eliminate the MID, in the U.S. Congress, House Resolution 25 expresses support for the present law rules for the MID. As of April 16th, the resolution has 193 cosponsors.


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