Research Report Options to Reform the Deduction for Home Mortgage Interest
Daniel Baneman, Hang Nguyen, Jeffrey Rohaly, Eric Toder
Display Date
File
File
Download Report
(460.79 KB)

Currently, taxpayers can deduct interest on up to $1 million in acquisition debt used to buy, build, or improve their primary residence or a second designated residence. In addition, taxpayers can deduct interest on up to $100,000 in home equity loans or other loans secured by their properties regardless of the loans purpose. We consider a proposal that would limit the amount of deductible interest to the amount incurred on the first $500,000 of debt on a primary residence only, and would replace the itemized deduction with a nonrefundable tax credit equal to 15 percent of eligible home mortgage interest.
Research Areas Economic mobility and inequality Taxes and budgets
Tags Fiscal policy Individual taxes Federal budget and economy Campaigns, proposals, and reforms Federal tax issues and reform proposals
Policy Centers Urban-Brookings Tax Policy Center