Geographic Gap Marks Mortgage Interest Deduction Benefit

February 18, 2014
mortgage lending news
A report by the Congressional Research Service indicates that the mortgage interest deduction is unevenly distributed across America, with a nearly $250 difference between states with the highest and lowest per-person benefit from the incentive. Some say this geographic disparity should be taken into consideration when lawmakers commence a review of the U.S. tax code.

The study revealed a per-capita savings through the deduction of $106 in the 10 smallest beneficiary states -- including Iowa, Arkansas, Kentucky, and West Virginia -- compared to per-capita savings of $350 in the biggest beneficiary states, including California, Colorado, Connecticut, Hawaii, Massachusetts, New Jersey, and the District of Columbia. The per-capita savings ranged from $87 in Mississippi to $414 in Maryland.

While consumer groups and tax policy advocates recommend turning the mortgage interest deduction into a tax credit, gradually capping the deduction or limiting the amount of interest that can be claimed based on a percentage of adjusted gross income, real estate and other housing groups insist the tax break must be maintained in order to grow and sustain the housing market.

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