What’s the fate of Mortgage Interest as an Itemized Deduction?

There is discussion in US Congress that the tax deduction for mortgage interest may be eliminated.

I think I’ve read different sources stating from 35-50% of those who can take the deduction elect not to do so. That might be evidence it’s not so critical to taxpayers.

This blog post indicates <30% of households take any extra MID above the standard deduction and about 2/3 of those make >=$100,000 per year and suggest phasing the MID out over 7-10 years.

Some proposals set a threshold of a certain maximum mortgage amount above which no deductions will be allowed, but also set a declining percentage of the total mortgage interest that is deductible, eventually running to zero, or non of the mortgage interest will be deductible.

The President’s Debt Reduction Panel suggested a lifetime cap of 12% of the mortgage on a primary residential property¬†up to $500,000 balance.

No word on whether the second home mortgage interest deduction will change or be eliminated, but don’t count on it to remain as it is.

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