More than 410 national, state and local organizations have endorsed the proposal of the National Low Income Housing Coalition to modify the mortgage interest deduction (MID) and use the savings from reform to fund the National Housing Trust Fund.

Recent news stories make clear the MID is no longer thought to be untouchable by those in the housing industry or by lawmakers. Real estate industry news publication Inman News reported on October 15 that panelists at a San Francisco real estate forum were certain that change is coming to mortgage interest tax policy, no matter who is elected president next week. On October 24, NPR reported that MID was sure to be up for reform when Congress returns from election recess for the lame duck session.

In an opinion piece in the New York Times on October 31, Yonah Freemark and Lawrence J. Vale argue that NLIHC’s proposal is a “straightforward” way to increase housing resources for the lowest income people, without adding to the deficit or harming the middle class.

Readers can test the proposal on their own tax bill using NLIHC’s housing tax reform calculator at http://bit.ly/R4D8ZM. The calculator uses average filings for a variety of taxpayer types to estimate the impact of different mortgage interest tax benefit scenarios—current law, a 20% mortgage interest credit and elimination of the mortgage interest deduction—for individual taxpayers.

The National Low Income Housing Coalition proposes to modify the current mortgage interest tax break by reducing the size of a mortgage eligible for a tax break to $500,000, and to convert the deduction to a non-refundable tax credit.

Converting the mortgage interest deduction into a 20% non-refundable tax credit will save the federal government between $20 billion and $40 billion a year while making this tax benefit more available to the middle and lower income families who need it. Homeowners would receive a tax credit for interest on mortgages up to $500,000. Interest on second homes and home equity loans would be eligible for credit under the $500,000 cap.

These changes would mean that all homeowners with mortgages would get a tax break, not just those who have enough income to file itemized tax returns. With a 20% tax credit, the number of homeowners with mortgages who would get a tax break would increase from 43 million to 60 million, with 92% of the increase being households with incomes less than $100,000 a year. It would also provide over $20 billion a year in savings that can be used to build and rehabilitate affordable rental housing by capitalizing the National Housing Trust Fund.

Click here to read the Inman News article.

Click here to read or listen to the NPR story.

Click here to read the New York Times op-ed.

Learn more about the MID, and NLIHC’s proposal, at www.housingtaxreform.org.