"Amidst a housing market that excludes many potential buyers, a particular group of homeowners benefits from a significant tax break for second homes through the mortgage interest deduction (MID). Originally meant for widespread support, the Tax Cuts and Jobs Act inadvertently transformed the deduction into a benefit for a select few due to changes in the standard deduction. While repealing the MID for second homes could yield substantial revenue primarily from high earners, the repercussions"
"The mortgage interest deduction (MID), a long-standing housing tax break, allows homeowners to deduct interest on up to $750,000 in mortgage debt, encompassing vacation and second homes if they itemize their taxes. Despite being a costly deduction, critics argue that the MID primarily benefits wealthier households, with over half the deductions claimed by those earning $150,000 or more annually and labeled as regressive."
The mortgage interest deduction (MID) permits homeowners to deduct interest on up to $750,000 in mortgage debt, and it applies to vacation and second homes for taxpayers who itemize. Changes from the Tax Cuts and Jobs Act raised the standard deduction and reduced the number of itemizers, concentrating MID benefits among fewer, generally higher-income households. Repealing the MID for second homes could generate substantial revenue primarily from high earners, but policy changes risk unintended impacts on middle-income buyers, local economies, and communities reliant on second-home spending. Critics label the MID regressive given its skew toward wealthier households.
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