A home mortgage interest deduction allows taxpayers who own their homes to reduce their taxable income by the amount of interest paid on the loan which is secured by their principal residence (or, sometimes, a second home). This can be a huge savings for home owners and it is still available.
The U.S. housing market stands to benefit from two tax provisions that were left alone in the hasty budget compromise that Congress reached yesterday, CNBC reported. In seeking to avert the fiscal cliff, federal lawmakers opted not to touch the mortgage-interest deduction and extended tax relief on mortgage debt forgiveness for a year.
President Obama had tweeted in the heat of the fiscal cliff debate that mortgage interest deduction could hit the chopping block if Republicans didn’t agree to raise taxes on America’s wealthiest individuals. Mortgage-interest deductions are a nearly $100 billion-per-year revenue drain for the U.S. Treasury, according to syndicate real estate columnist Kenneth Harney, but some real estate experts feared that eliminating the tax break would have a deep impact on the housing market.
Information taken from CNBC and Washington Post.