Mortgage Interest Deduction: Not A Tax Break For The Middle Class

[Travis_0004]

20. I agree with this

Your math is right on, although right now interest rates are low, and houses are affordable. In a few years interest rates will be back up, making houses less affordable and making the interest deduction more valuable.

Also, there is one thing you didn't mention (which makes the mortgage deduction less valuable). A lot of people without mortgages use the standard deduction, but the mortgage deduction requires people to itemize.

Lets say a husband and wife (w/o a mortgage) claim a standard deduction of 11,900.

The decide to buy a house, and their mortgage interest is 10k a year, and they have other deductions of 7k. They can no claim a deduction of 17k, which is only an improvement of 5.1k over the standard deduction. A few years down the road, this couple might find that the standard deduction is higher then itemizing, in which case they don't get a mortgage deduction.

On the plus side, if the benefit is limited, then so is the cost, so I would favor keeping it, just don't allow a second home to be deducted.