Changing MID Will Not Have Negative Effect on Housing Market

A new paper from the Urban Institute explores the question of whether mortgage interest deduction (MID) reforms would hurt the economy and undermine the value of owner-occupied homes. The authors conclude that predictions of dire consequences are overstated, but that more research needs to be done. While earlier studies showed that eliminating the MID as well as the property tax deduction would reduce housing prices in areas with more high income residents in the short term, more recent research since the mid-2000s show no connection between house prices and MID. Further, most MID reform proposals would modify, not eliminate, the tax break for homeownership.The paper, entitled How Would Reforming the Mortgage Interest Deduction Affect the Housing Market? is authored by Margery Austin Turner, Eric Toder, Rolf Pendall, and Claudia Sharygin. Click here to read the paper.