After Exposing Realtors, Eliminate the Mortgage Interest Deduction
Just as high agent commissions inflate US home prices, so does this tax credit that only about 10% of households take advantage of anyway.
The housing game has changed.
Photographer: Artur Widak/NurPhoto via Getty Images
The National Association of Realtors has agreed to pay about $418 million to settle litigation related to how real estate agents set commission rates, an arrangement that many experts said inflated housing prices and exacerbated the affordability crisis. With this settlement in hand, now is the perfect time to take on that other inflator of home prices: the mortgage interest deduction.
The simple fact is that the mortgage interest deduction does not increase homeownership and was not created with that goal in mind. It is a holdover from tax policy dating back to 1913 to deduct all interest expense from income, a policy intended for businesses and farms. The 1986 tax reform limited personal interest deductions to mortgages (but adding a cap), arguably because President Ronald Reagan and Congress were not willing to take on the likely pushback from the National Association of Realtors and homeowners who enjoyed the deduction.