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Thoughts about today’s NYT article re the vanishing mortgage interest deduction

Write-Off: The Tax Blog

Today’s NYT has an article by Jim Tankersley and Ben Casselman that shows 21% of taxpayers took a deduction for mortgage interest expense in 2017 but only 8% did in 2018.  This is consistent with TCJA’s substantial increase in the standard deduction and the reduction in the maximum value of new mortgage debt eligible for the deduction.  None of this is surprising.  The more interesting part of the article is that, contrary to some predictions, they find no impact on housing prices.  Given the longstanding claims by the housing industry about the purported importance of the mortgage interest deduction for prices, I find this article intriguing.  Like many topics in the business press, much of the analysis is anecdotal.  So, the topic may be worthy of a more rigorous empirical analysis.

Nevertheless, the article confirms my longstanding prior that the elimination of the traditional deductions on Schedule A (particularly, medical, taxes, interest, and charitable gifts) would have limited economic impact.  TCJA’s increase on the standard deduction and its $10,000 cap on tax deductions strike me as steps in the right direction toward eventual eliminations of Schedule A.

And that comes from a dean who spends (too) much of his time raising money for an educational institution whose gifts are deductible. 🙂

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