January 18, 2013 – (RealEstateRama) — The National Low Income Housing Coalition proposes to modify the current mortgage interest tax break by reducing the size of a mortgage eligible for a tax break to $500,000, and to convert the deduction to a 15-20% non-refundable tax credit.
The proposal to modify the mortgage interest deduction into a tax credit will save the federal government between $20 billion and $40 billion a year while making this tax benefit more available to the middle and lower income families who need it. Homeowners would receive a 15-20% non-refundable credit for interest on mortgages up to $500,000. Interest on second homes and home equity loans would be eligible for credit under the $500,000 cap.
These changes would mean that all homeowners with mortgages would get a tax break, not just those who have enough income to file itemized tax returns. With a 20% tax credit, the number of homeowners with mortgages who would get a tax break would increase from 43 million to 60 million, with 92% of the increase being households with incomes less than $100,000 a year. It would also provide over $20 billion a year in savings that can be used to build and rehabilitate affordable rental housing by capitalizing the National Housing Trust Fund.
To read recent covereage of The New York Times endorsement of this strategy, click here.
To endorse funding the National Housing Trust Fund by reforming the mortgage interest deduction, click here.