David Clark

In the wake of the worst recession in almost a century, reducing the burgeoning federal deficit has taken on new urgency in Washington. Both the administration and Congress are committed to the effort, and earlier this year, the President created a commission on reducing the federal debt that will make recommendations in early December.

When he appointed the commission, the President made it clear that everything was on the table. Given that charge and the mood in Washington, it seems likely that the commission may recommend limiting the mortgage interest deduction. The media are already speculating that the mortgage interest deduction will be targeted. Moreover, the deduction and other tax breaks for housing, including the deduction for state and local property taxes and the Low Income Housing Tax Credit, also could come under attack as tax reform and deficit reduction efforts move forward.

Landmark financial reform legislation enacted earlier this year also has the potential to affect housing negatively as new regulations are put in place and new federal agencies are created. And the impending reform of Fannie Mae, Freddie Mac, and the Federal Home Loan Bank could be detrimental to housing as well.

Taken in their entirety, these events very likely signal the beginning of a sustained attack on housing’s role in American society. This is a potential watershed in how housing is perceived and how it is treated in the tax code and federal policy.

For almost 100 years—since the federal income tax became permanent in 1913—the tax code has supported homeownership through the mortgage interest deduction. And Americans overwhelmingly oppose any action by Congress to tamper with the mortgage interest deduction, according to an NAHB survey of likely voters conducted in early September.

Robert R. Jones

Chairman of the Board,


Washington, D.C.
Robert R. Jones Chairman of the Board, NAHB Washington, D.C.

Nearly 80 percent of those polled believe that the federal government should provide tax incentives to promote homeownership. And even when told that eliminating the mortgage interest deduction would help ease the federal budget deficit, 75 percent of homeowners and 55 percent of renters opposed doing away with the home mortgage interest deduction.

When asked to rate the importance of preserving tax deductions in the current tax code, an overwhelming 81 percent said it’s important to keep the deduction of mortgage interest on a primary home, ranking it in a virtual tie with medical expenses (82 percent). In addition, more than three-quarters of respondents (76 percent) cited the importance of keeping the deduction for state and local taxes, including property taxes.

Those renting their current homes also placed a high priority on preserving the mortgage interest deduction. In ranking the importance of current tax deductions, renters said this provision came in second at 71 percent, behind the deduction for medical expenses.

Although opponents of the mortgage interest deduction claim that it benefits only the wealthy, a recent NAHB analysis of IRS Statistics of Income disproves this assertion.

For almost 70 years the NAHB has been the voice of America’s housing industry. With housing facing multiple threats and unprecedented challenges, the NAHB is prepared to do whatever it takes to ensure that housing remains a national priority.