Should We Reform the Home Mortgage Interest Deduction? Three Different Views from Our Readers

Suburbs 1

Homes in suburban Los Angeles/ Photo by JR Woodward

By Jackie Stein

After we published a blog piece on the Home Mortgage Interest Deduction (HMID) this summer, several people wrote in to tell us how this tax break affected their lives.

Home Mortgage Interest Deduction: Your Stories

Doris from Fort Washington, MD, wrote to tell us that

“without the HMID I would not be able to manage my expenses at all.” As a single person with a clerical job, she said “I honestly don’t know how I’d be able to manage without HMID. The prospect of losing this deduction terrifies me!”

Jonathan from Escondido, CA, sold real estate for several years and decided:

“that the big beneficiaries of the home loan interest deduction are the banks.” The HMID makes homes more affordable “without lowering the price tag of the house (and therefore the amount of the loan) … and therefore pushes the price up.” After doing tax savings calculations with clients for many years, he felt that “if there were no home loan interest deduction, the price of real estate would be lower.” So, he concluded, “the deduction does not really benefit the working class.”

Finally, Robert, from Milwaukee, WI, was frustrated that

wealthy people with boats and second homes could use the HMID to "finagle some kind of write off," since second homes and even yachts can qualify for the HMID, while people like him had to pay their full share of taxes. 

Home Mortgage Interest Deduction: How Expensive, and Who Benefits?

The HMID is estimated to cost the U.S. Treasury $93 billion in fiscal 2013:

  • 15 percent of those savings go to the top 1 percent of households – those who make $462,500 and above*
  • 6 percent of the benefits go to families earning between $54,000 and $78,000
  • 2 percent of benefits from the HMID go to families making less than $54,000.

Chart: estimated cost of the Home Mortgage Interest Deduction over time. For more on the cost of top tax breaks and who benefits, see our Big Money in Tax Breaks visualization.

Tell Your Story

These tax breaks affect all of us in direct and indirect ways. What do you think about them? Do you have a story about how tax breaks or other federal programs and policies affect your life? Share your story on our Faces of the Federal Budget page and weigh in on this important debate – especially as Congress prepares to take up tax reform. See an interactive visualization of tax breaks here.

*two-person household

Jackie Stein is a PhD candidate in sociology at the University of Massachusetts and an intern at National Priorities Project.