Mortgage interest deduction of little value to families earning less than $50K, data shows

TRD New York /
Oct.October 26, 2012 09:30 AM

The mortgage interest deduction has become a political hot potato this election season, but perhaps under a number of wrong assumptions. As the New York Times reports, the deductions actually benefits few middle-class Americans.

While Romney has said he would limit itemized deductions, what many critics have missed is that only 30 percent of Americans even itemize their taxes, the Times said. Beyond that, however, those that benefit most from the mortgage interest deduction are upper and upper-middle class earners — people making between $100,000 and $500,000 a year.

Not only does the deduction grow in higher tax brackets, but the deduction can be used towards second homes, favoring higher-earners more likely to own multiple dwellings.

In fact, the value of the deduction for households making between $40,000 and $50,000 per year is a mere 0.3 percent of their post-tax income, the Times noted, using data provided by the Urban-Brookings Tax Policy Center.

And, yet, “the deduction has been politically sacrosanct for so long,” the Times said, reflecting “just how much it is prized by the itemizers of the moment, as well as those who are in the business of selling homes.” [NYT] –Guelda Voien


Related Articles

arrow_forward_ios
(iStock)

Banks required balloon payments, stayed mum on foreclosure moratorium

Banks required balloon payments, stayed mum on foreclosure moratorium
Fed Board Governor Lael Brainard (Getty, iStock)

Fed wants banks to step up lending in low-income areas

Fed wants banks to step up lending in low-income areas
Wall Street investors are prepared to buy and turn single-family homes into rentals when forbearance programs expire and homeowners look to sell. (iStock)

Wall Street investors bet on single-family rentals as mortgage payments stack up

Wall Street investors bet on single-family rentals as mortgage payments stack up
(iStock)

Landlords lost about $9B in rental payments last quarter: report

Landlords lost about $9B in rental payments last quarter: report
Fed Reserve Chairman Jerome Powell (Getty)

What low interest rates through 2023 means for real estate

What low interest rates through 2023 means for real estate
As rates hold steady at 3 percent, the average loan hit another record high: $370,200 (iStock)

Size does matter: Mortgage loan average swells to new record

Size does matter: Mortgage loan average swells to new record
Ed Adler and Wendy Silverstein (Getty)

Wendy Silverstein, Ed Adler launch loan restructuring biz

Wendy Silverstein, Ed Adler launch loan restructuring biz
The rates for a 30-year fixed-rate mortgage dropped 7 percentage points for the week ending September 10, reaching 2.86 percent. (iStock)

Mortgage rates notch new low

Mortgage rates notch new low
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...