Battle Lines Form Over Popular Mortgage Interest Deduction

Treasury Secretary-designee Steven Mnuchin last week raised eyebrows on Capitol Hill and drew scrutiny from business advocates by pointing to potential curbs on the mortgage interest deduction in a CNBC interview.

“We’ll cap the mortgage interest, but allow some deductibility,” Mnuchin said on Nov. 30.

President-elect Donald Trump’s tax proposal makes no specific changes in the current federal tax write-off for home mortgage interest on loan principal amounts of $1 million or less. But the plan calls for a cap on all itemized deductions, which would include the mortgage interest deduction, at $100,000 for an individual tax filer and $200,000 for a couple filing jointly.

David Stevens, president of the 2,400-member Mortgage Bankers Association, said in an interview that his group has serious concerns about any potential changes, including any attempt to lower the loan principal cap.

“In isolation, it would be something we would object to strongly,” Stevens said. “If there is going to be broad income tax reform, we are eager to engage in that dialogue, and we assume everything is on the table.”

Jerry Howard, CEO of the National Association of Home Builders, pushed back against any new mortgage incentive curbs and Trump’s itemized deduction cap.

He said such measures “would be a sign the government is not encouraging home ownership” and a reversal of longstanding policy goals.

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