Mortgage Interest Deduction
This cluster focuses on the US mortgage interest tax deduction, debating its limited benefits for most homeowners due to the increased standard deduction, which leads about 90% to not itemize and thus forgo it.
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Isn't this accounted for with the standard deduction and marginal tax brackets?
Why would you forgo the mortgage interest tax deduction?
You have just described the mortgage deduction.
Mortgage interest deduction is only available for people who itemize, i.e. people who owe more federal income tax than the standard deduction. Per IRS statistics, only 11% of tax filers itemized in 2019. I would bet this deduction does not benefit anyone who is struggling to decide between renting or buying.
The standard deduction is now taken close to 90% of the time in the US. Most people no longer benefit from the mortgage interest on their taxes.
The standard deduction has been significantly increased in the US recently. Mortgage interest is often not worth itemizing unless you're in a high cost of living area or have a big house elsewhere.
Didn't you deduct the mortgage interest you paid?
You realize that many of the exemptions, credits and deductions disproportionately benefit well off people, right? I mean, something like the home mortgage interested deduction is off no use to many homeowners because they don't earn enough to itemize deductions. Plus the deduction saves you more money the bigger and more expensive your house is....
The mortgage interest tax deduction is effectively eliminated for 90% of Americans because the standard deductions are high enough that 90% of people do not itemize to be able to claim the mortgage interest tax deduction.
I'd imagine practically no one actually takes that because the standard deduction is more lucrative. Unless you live in a far above average priced home with a jumbo loan.