Mortgage interest mansions?
Every tax deduction or credit has its lobbying constituency, and the mortgage interest deduction is no different. The deduction ostensibly supports the American dream of home ownership, but a new study from the R Street Institute casts doubt on that idea. According to The Wall Street Journal, “The study estimates that tax preferences, particularly the mortgage-interest deduction, have helped drive up the size of houses by as much as 18% in the nation’s most affluent areas while not broadly encouraging people to buy homes.” In Washington, DC, for example, researchers say homes are some 1,400 square feet bigger because of the deduction.
