Mortgage Interest Deduction

The mortgage interest deduction, which is sometimes called the MID, has been a cornerstone of American housing policy since the inception of the tax code more than 100 years ago. It supports the aspirations of families at all income levels to become home owners, and Americans overwhelmingly oppose any action by Congress to tamper with the deduction.

Policy Statement

NAHB supports homeownership and rental housing incentives in the current tax code, specifically the deductions for mortgage interest and state and local property taxes as well as provisions that encourage development of affordable housing. NAHB believes that the mortgage interest deduction and other housing tax incentives have helped the U.S. create the best-housed nation on earth. 

Why It Matters

The mortgage interest deduction helps make the tax code more progressive and primarily benefits middle class taxpayers. Data from the Congressional Joint Committee on Taxation shows that 82 percent of households who benefit from the mortgage interest deduction have incomes of less than $200,000.

Repealing the MID would have serious economic consequences. Almost all studies examining the elimination of the mortgage interest deduction find that it would reduce demand for housing by raising taxes on prospective home buyers. This reduction in housing demand would also lower home values for existing home owners who would experience a significant loss in wealth. A 1 percent decline in home prices would result in a loss of $200 billion to American households. Just a 5 percent decline would eliminate $1 trillion in household net worth.

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