Having a tax deduction for mortgage interest makes owning your home more affordable because the deduction lowers your taxes. That’s savings we can all use, especially the 37% of homeowners who spend more than 30% of their income for housing. Paying less for your mortgage gives you more money for savings and other household expenses.
When homeownership is affordable, more renters can buy a home of their own responsibly. That creates more home buyers.
How the Deduction Works
When you pay your federal income tax, if you itemize your deductions, you can claim the mortgage interest you pay on your primary residence and second-home debt totaling $1 million, and interest paid on home equity debt of as much as $100,000.
The average U.S. homeowner can save thousands of dollars at tax time by deducting their mortgage interest.
More Facts About Mortgage Interest Deduction
* Those who favor keeping the mortgage interest deduction know it helps middle-income families. It would be unfair to take the deduction away from middle-class taxpayers, who already pay 80% to 90% of the income tax in our country.
* More than 90% of the families who claim the mortgage deduction earn less than $200,000, and 63% earn less than $100,000, estimates the NATIONAL ASSOCIATION OF REALTORS®.
* A disproportionate number of those high-income taxpayers live in areas where housing is especially expensive, such as California and New York. In high-cost housing markets, lowering the $1 million cap would add a tax burden on families who already pay high prices for homes.
* Protecting the deduction promotes housing. By supporting the MID, we help ensure that tomorrow’s families can follow the same path to homeownership that so many of us have already traveled.