By Jenny Schuetz | Brookings
By far the largest housing subsidy in the U.S. is the mortgage interest deduction (MID), which allows homeowners to deduct interest paid on their home loans from income subject to federal income taxes. A key component of the
Tax Cuts and Job Acts proposed recently by House Republicans would cap the MID at $500,000, down from the current level of $1,000,000. Nationally, this policy change would affect a small share of homeowners: the median house value in the U.S., for instance, is $205,000, according to 2016 American Community Survey data. Estimates suggest that around three to six percent of mortgages are above $500,000. But, the impacts in some metropolitan areas could be much larger.
