The House Ways and Means Committee is discussing a cap on the home mortgage interest deduction as part of its discussions about tax reform.
The home mortgage interest deduction allows taxpayers who itemize to deduct home mortgage interest paid to lenders on their tax returns. The deduction, in turn, reduces one’s taxable income which then reduces the amount of tax one pays.
The current proposal is to limit the amount of deductible mortgage interest to $500,000.00 for joint filers and to $250,000.00 for individual filers. The idea is to reduce a tax benefit intended for middle income taxpayers that is being claimed by wealthier taxpayers.
According to IRS data, in 2011 filers earning $50,000.00 or less claimed only 17% of the mortgage interest deduction while filers earning $100,000.00 or more claimed 51% of the mortgage interest deduction.
Do you claim a mortgage interest deduction on your tax return? Do you think that the home mortgage interest deduction should be capped for certain taxpayers?