After the federal government enacted a large-scale tax reform package late last year, it became clear that between the lowered ceiling for eligible mortgage interest deductions and the doubled standard deduction, fewer homeowners would be compelled — or allowed — to deduct their mortgage interest. Now, we have a better idea to the extent of that impact.
As the Wall Street Journal reports, while the mortgage interest deduction saved taxpayers $60 billion in 2017, the Joint Committee on Taxation estimates that it will only save taxpayers $25 billion this year.
Similarly, while 46.5 million households itemized their deductions in 2017, only 18 million are expected to do so this year. This will mean that 57 percent fewer homeowners will deduct mortgage interest, or 13.8 million taxpayers — a cohort that will be skewed heavily toward high-earners.
Last year, 36.5 percent of the tax break went to households earning between $100,000 and $200,000; this year, that percent will be closer to 28.9. Conversely, 12.4 percent of the tax break went to households earning over $500,000 last year, a share that will nearly double to 23.9 percent.
The value of the deduction is also suppressed by the lowered ceiling on mortgages, as homeowners can now only deduct interest on the loan up to $750,000 rather than $1 million.
This article originally published at http://dc.urbanturf.com/articles/blog/the-now-unpopular-mortgage-interest-deduction/13886
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