Research Report Options to Reform the Deduction for Home Mortgage Interest
Chenxi Lu, Joseph Rosenberg, Eric Toder
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Taxpayers can currently deduct interest on up to $1 million in acquisition debt used to buy, build, or improve their primary residence or a second designated residence. They can also deduct interest on up to $100,000 in home equity loans or other loans secured by their properties, regardless of the purpose of loans. This brief considers three proposals for restructuring the mortgage interest deduction: replacing the deduction with a 15 percent non-refundable interest credit, reducing the ceiling on debt eligible for an interest subsidy to $500,000, and combining the substitution of the credit for the deduction with the reduced limit on the interest subsidy.
Research Areas Economic mobility and inequality Taxes and budgets Housing
Tags Fiscal policy Federal housing programs and policies Individual taxes
Policy Centers Urban-Brookings Tax Policy Center