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IPFS News Link • Housing

Obama May Revive Bid to Limit Mortgage Tax Break

"I think we'll see the same old tricks," said a housing industry source who was not authorized to comment on the record, noting that it would vigourously fight limits. Earlier proposals limit the value of deductions to no more than 28 percent, which would boost taxes for the top two income brackets, generally those earning more than $200,000. Critics have held back the idea, in particular arguing it would hamper charitable giving by the rich. But amid rising concern about budget deficits topping $1 trillion annually, some say the idea could gain new legs. "We now see a real risk to the mortgage interest deduction," analysts for MF Global wrote in a recent investor note. Still, they added that any change would have to be part of a broader tax overhaul. The mortgage interest deduction, highly prized by the middle and upper income classes, is one of the biggest so-called tax expenditures, which critics say inflates home ownership and distorts economic decision making. Several deficit fighting panels have recommended limiting the deduction.

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