Expanding Modeling Capacity on Tax Expenditures for Homeownership

This report describes the Tax Policy Center (TPC) Microsimulation Model’s revamped home mortgage interest deduction (MID) module. The TPC tax model uses the module for simulating proposals that reform the MID. The new MID module improves upon the prior one in accounting for potential changes in portfolio behavior, providing options to allow taxpayers to pay down mortgage debts with their financial assets. The new MID module is the basis for the recent brief, “Effects of Tax Incentives on Homeownership.”