tag:blogger.com,1999:blog-2938311055760665357.post2283710703876027052..comments2024-03-27T03:49:12.592-07:00Comments on Ed Dolan's Econ Blog: Who Benefits from the Mortgage Interest Deduction?Ed Dolanhttp://www.blogger.com/profile/08757995049056872214noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-2938311055760665357.post-56729859357201828812017-01-24T11:05:28.067-08:002017-01-24T11:05:28.067-08:00Additional consideration is that mortgage interest...Additional consideration is that mortgage interest tax deduction is a financial incentive that makes home ownership more more affordable, thus possibly driving home prices up. So, if future deductions are factored in home prices, the cumulative deductions received by the owner over the term of the ownership can be viewed as the refund of the premium that the owner has paid upfront, at the time of the purchase.<br />An alternative hypothesis, is that higher home prices result in higher R/E taxes, in this scenario federal deduction is used to pay higher local R/E taxes, thus deduction doesn't really make home ownership more affordable, and therefore doesn't affect home prices.<br />Whichever hypothesis is correct, in either scenario - the homeowner, in terms of money left in the pocket, gains only a fraction of the deduction amount, if anything at all.<br />Misha Mostovhttps://www.blogger.com/profile/02666732309071892133noreply@blogger.com