Aug. 12, 2011 — The Home Ownership Matters bus parked outside a local Lowe’s retailer in Des Moines today to raise awareness about threats to eliminate or trim the mortgage interest deduction, a step some on Capitol Hill believe could help reduce the country’s budget deficit.
So why is it important to keep the mortgage interest deduction? Cutting it would destabilize the already shaky housing market, says NATIONAL ASSOCIATION OF REALTORS® Chief Economist Lawrence Yun in an interview with Real Estate Insights. “It would lead to home values falling by 15%, equating to a destruction of housing wealth equivalent to $2.5 trillion.”
MID has been part of the U.S. tax code for nearly a century, notes Dave Bert, CEO of the Iowa Association of REALTORS®, who also chatted with bus tour visitors in Des Moines:
Although only about one-third of taxpayers itemize in any particular year, most home owners have claimed the mortgage interest deduction at some point in their home ownership life.
Slideshow: Your Mortgage Deduction: Turn Tax Savings into Home Value
Who claims the MID?
- 63% of the families who claim it earn between $50,000 and $200,000 per year, according to the most recently available data from IRS tax returns.
- Among those who take MID, about two-third of all families earn less than $100,000.
- About one-third of all Americans itemize their tax deductions instead of claiming the lump-sum standard deductions. More than 80% of those who itemized claimed the MID.
- More than half of home owners claim the MID. The MID can only be claimed by home owners who pay mortgage interest, and nearly one-third of home owners own their homes free and clear. Among mortgaged properties, more than 80% claim the MID.
- Home owners already pay about 80% to 90% of all federal income tax.