Momentum for reforming the mortgage interest deduction (MID) – a $70 billion tax expenditure that primarily benefits higher income households – has been growing in recent weeks. Politico and the Washington Examiner report that the Trump administration is actively considering reforms to the MID, including changes embraced by the NLIHC-led United for Homes campaign to reduce the amount of a mortgage eligible for the tax break to $500,000. Currently, homeowners can deduct interest on the first $1 million of their mortgage.
NLIHC’s President and CEO Diane Yentel participated in a small, invitation-only “Real Estate Industry and Tax Reform” listening session at the White House on July 31, where she made the case for reforming the MID and reinvesting the significant savings into rental homes for people with the greatest needs. Ms. Yentel reports that National Economic Council Director Gary Cohn and other key decision makers on tax reform within the administration responded positively to making both direct and indirect changes to the MID.
However, if the White House and Congress move forward with reforms to MID, they may seek to use the savings to offset the cost of lowering tax rates for wealthy individuals and corporations. It is more important than ever that advocates demand that housing dollars be kept in housing and that housing-related tax savings go toward affordable rental homes for people with the greatest needs.