The home Mortgage Interest Deduction – who benefits the most?
Figure 2 from Federal Involvement in Real Estate.
The federal government spends billions each year in the real estate market through a web of costly programs with an uneven impact on homeowners, renters and communities. Smart Growth America’s recent report Federal Involvement in Real Estate surveyed 50 federal real estate programs to better understand where this money goes, who is benefiting (and who isn’t) and which programs are particularly in need of a closer look.
One of the costliest tax-expenditure programs for housing is the home Mortgage Interest Deduction (MID). Created in 1913, the federal government commits an average of $80 billion each year to this program intended to promote homeownership. Our recent report explains that while the MID does promote increased spending on housing , it does not necessarily increase rates of homeownership. Compounding this problem, the deduction in its current form may be skewing the real estate market in unintended ways. 