Trump Administration Considers Reforms to Mortgage Interest Deduction (MID)

Reform the MID and Reinvest Significant Savings in Rental Homes for Those with Greatest Need

Momentum for reforming the mortgage interest deduction (MID) – a $70 billion tax expenditure that primarily benefits higher income households – has been growing in recent weeks.

Politico and, in an opinion piece, the Washington Examiner report that the Trump administration is actively considering reforms to the MID. Read our previous Analyzing Reforms to the Mortgage Interest Deduction.

These reforms include changes embraced by the National Low Income Housing Coalition (NLIHC)-led United for Homes campaign to reduce the amount of a mortgage eligible for the tax break to $500,000. Currently, homeowners can deduct interest on the first $1 million of their mortgage.

Diane Yentel: Now is the Time to Demand Action on the Affordable Homes CrisisNLIHC’s President and CEO Diane Yentel participated in a small, invitation-only “Real Estate Industry and Tax Reform” listening session at the White House on July 31. At the listening session, Ms. Yentel made the case for reforming the MID and reinvesting the significant savings into rental homes for people with the greatest needs.

Ms. Yentel reports that National Economic Council Director Gary Cohn and other key decision makers on tax reform within the administration responded positively to making both direct and indirect changes to the MID.

However, if the White House and Congress move forward with reforms to MID, they may seek to use the savings to offset the cost of lowering tax rates for wealthy individuals and corporations.

It is more important than ever that advocates demand that housing dollars be kept in housing. And housing advocates should demand that housing-related tax savings go toward affordable rental homes for people with the greatest needs.

Politico reported that, “[L]imiting the mortgage interest deduction amounts to a de facto tax increase on current or future homeowners while putting homeownership further out of reach for prospective buyers,” said National Association of Realtors President William Brown in a statement. “We would have strong objections over any effort to further cap or limit the deductibility of mortgage interest.”

The Washington Examiner writes, “As we have argued before, there are many reasons to doubt the merits of the mortgage interest deduction, yet no easy way to eliminate it. Governments have long regarded home ownership as an axiomatically good thing, and arguments can be marshaled in its support. But renting is a perfectly sensible option, and ultimately the case is strong that government should not induce people to borrow hundreds of thousands of dollars to buy homes, or to purchase more expensive homes, when it might not otherwise be in their interest to do so.”

Politico Article

Washington Examiner Article

United for Homes

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