(Updated February 2014)
Introduced along with the Income Tax in 1913, the Mortgage Interest Deduction (MID) allows homeowners who itemize their taxes to deduct mortgage interest attributable to primary residence and second-home debt totaling $1 million, and interest paid on home equity debt up to $100,000. Though the MID is a popular tax deduction for millions of U.S. homeowners, it has become a controversial topic in recent years. This field guide highlights basics, perceived pros and cons, IRS rules, and more to get you up-to-speed on this widely-debated tax deduction.
Q - ProQuest articles available for NAR members only. Password can be found on the ProQuest/Find Articles page.
The Sacrosanct Mortgage Interest Deduction, (Economix Blog, The New York Times, Aug. 6, 2013).
Mortgage Interest Deduction topic page, (National Association of REALTORS®).
Tax Reform Could Include Revamp of Mortgage Interest Deduction, (Inman News, May 7, 2013).
Debt and Deficit: A Public Opinion Dilemma, (Pew Research Center, June 14, 2012).
Rethinking the Mortgage Interest Deduction, (Video from the Tax Policy Center, Urban Institute and Brookings Institution, July 29, 2011).
What's the Future of the Mortgage-Interest Deduction?, (Wall Street Journal, May 18, 2011).
History of the MID
The Geographic Distribution of the Mortgage Interest Deduction, (Pew Charitable Trusts, Apr. 20, 2013).
A Deduction Unevenly Used, (The New York Times, May 16, 2013).
The Mortgage Interest Deduction: Background and Statistics, (National Association of Home Builders, Mar. 2012).
Biography of a Dream, (Mortgage Banking, July 2011). Q
Historical Federalist Perspective on the Home Mortgage Interest Deduction for Federal Income Tax, (Journal of Business & Economic Research, June 2010). Q
How Does the MID Benefit Housing and Homeownership?
Rich, Poor, and In Between: Who Benefits from the Mortgage Interest Deduction? (Hudson Institute, Apr. 2013)
Housing Tax Incentives Critical to Maintain Thriving Middle Class, NAHB Tells Congress, (National Association of Home Builders, Apr. 25, 2013).
Some Ideas on Reforming the Mortgage Interest Deduction to Benefit More People, (Mother Jones, Apr. 7, 2013).
Mortgage Interest and Real Estate Tax Deduction Facts, (Economists' Outlook blog, National Association of REALTORS®, Dec. 7, 2010).
Another Challenge to the Mortgage Interest Deduction, (Speaking of Real Estate blog, Dec. 1, 2010).
Why the MID Deserves to Stay, (REALTOR® Magazine, Sept. 2010).
Mortgage Interest Deduction Vital to Housing Market, (HouseLogic.com, Jan. 11, 2010).
Why Is There Opposition to the MID?
Mortgage Interest Deduction Is Ripe for Reform: Conversion to Tax Credit Could Raise Revenue and Make Subsidy More Effective and Fairer (Center on Budget and Policy Priorities, June 25, 2013).
CBO Study: Wealthy Win Lion's Share of Major Tax Breaks Like Mortgage Interest Deduction, (Associated Press via Newser, May 29, 2013).
Full CBO study referenced in Associated Press article: The Distribution of Major Tax Expenditures in the Individual Income Tax System, (Congressional Budget Office, May 29, 2013).
End the Home Mortgage Deduction, (Bloomberg News, May 9, 2013).
Mortgage Interest Deductions and Homeownership: An International Survey, (Journal of Real Estate Literature, 2013). Q
Who Really Benefits From Interest Deductions, (The New York Times, Oct. 25, 2012).
Billions of Tax Dollars Spent Inflating the Housing Bubble: How and Why the Mortgage Interest Deduction Failed, (Journal of Corporate & Financial Law, 2012). Q
The Distributional and Revenue Consequences of Reforming the Mortgage Interest Deduction, (National Tax Journal, Dec. 2011). Q
Chart of the day: Where does the mortgage-interest deduction go?, (Reuters, July 12, 2011).
Rules, Forms, & Guidelines from the IRS
Home Mortgage Interest Deduction: Publication 936 (for use in preparing 2013 returns), (IRS.gov, Jan. 28, 2013).
Topic 504—Home Mortgage Points, (IRS.gov, Apr. 15, 2013).
Equitable Ownership and Mortgage Interest Deductions, (The Tax Adviser, Jan. 2012). Q
The IRS, MID and You
REALTORS® Urge Preserving Homeownership Tax Policies, (REALTOR® Magazine Online, Apr. 26, 2013).
Testimony of Gary Thomas, 2013 President National Association of REALTORS®, Before the United States House of Representatives (Committee on Ways and Means Hearing Titled Tax Reform and Residential Real Estate, Apr. 25, 2013).
NAR Issue Summary: Federal Tax/Mortgage Interest Deduction, (National Association of REALTORS®, 2012).
Revenue Costs and Incentive Effects of the Mortgage Interest Deduction for Owner-Occupied Housing, (National Tax Journal, June 2011). Q
Americans Oppose Eliminating Income Tax Deductions, (Gallup.com, Apr. 15, 2011).
eBooks & Other Resources
The following eBooks and digital audiobooks are available to NAR members:
How to Invest in Real Estate & Pay Little or No Taxes (Adobe eReader)
J.K. Lasser's New Tax Law Simplified 2010 (Adobe eReader)
J.K. Lasser's 1001 Deductions and Tax Breaks 2010 (Adobe eReader)
Field Guides & More
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