Industry leaders are riled over a federal proposal to overhaul the mortgage interest tax deduction, according to CNNMoney. The deduction, which allows homeowners to deduct interest on their mortgages of as much as $1 million, would be curtailed under the proposal, brought forward by the presidential deficit commission (see CNBC video on the proposal above). Among the changes would be a $500,000 mortgage cap and a 12 percent non-refundable tax credit made available to all. The panel, which has been tasked with reducing the national deficit by $4 trillion over the next decade, said that the tax deduction could be siphoning too much cash out of federal coffers. [more]

From the April issue: Call it the third rail of the federal tax
system: the politically untouchable cluster of special benefits and
subsidies set aside exclusively for homeowners, including deductions
for mortgage interest, local property taxes and capital gains
exclusions on up to $500,000 in sale profits. Is the Obama
administration serious about beginning to clamp limits on at least some
of these subsidies? The administration isn’t commenting on anything
beyond what was proposed in its first budget, submitted at the end of
February, but housing and banking trade groups are worried that the
initial proposal to cut back on the ability of upper-income families to
write off mortgage interest and other expenses is just the opening move
in a longer-range effort to reform the federal tax code. [more]