Research report Options to Reform the Deduction for Home Mortgage Interest
Daniel Baneman, Hang Nguyen, Jeffrey Rohaly, Eric Toder
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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.
Primary topic Individual Taxes
Research Area Individual Taxes Federal Budget and Economy Campaigns, Proposals, and Reforms