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Research report

Options to Reform the Deduction for Home Mortgage Interest

Daniel Baneman, Hang Nguyen, Jeffrey Rohaly, Eric Toder
August 16, 2011
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Abstract

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.

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Individual Taxes Federal Budget and Economy Campaigns, Proposals, and Reforms
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Meet the Experts

  • Daniel Baneman
  • Hang Nguyen
  • Jeffrey Rohaly
    Principal Research Associate
  • Eric Toder
    Institute Fellow and Codirector, Tax Policy Center
Research report

New Evidence on The Effect of The TCJA On the Housing Market

Robert McClelland, Livia Mucciolo, Safia Sayed
March 30, 2022
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