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by andechs 1991 days ago
The tax deduction on mortgage interest is one of the most regressive pieces of tax policy.

Those with more expensive housing benefit more from the credit. Non-homeowners do not benefit at all, and renters tend to be poorer than homeowners.
1 comments
sokoloff 1991 days ago
Renters are living in housing which is itself eligible for business loan deductions. If you believe that landlords use the cost of holding real estate as an input that shapes the supply side of the supply-demand balance in the broad rental market (as I do), then it seems that renters do indirectly benefit from the deductibility of the loans on the buildings in which they live.

The mortgage interest deduction serves to put the purchasers of owner-occupied real estate onto a more equal footing with commercially-rented real estate. That seems like a valid public policy purpose, even though the mortgage interested deduction became substantially less valuable with TCJA-2017.

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matsemann 1991 days ago
But it keeps renters renters. I'd rather forego my tax deduction for owning my apartment and bake it into the normal tax. I feel it's unfair a friend can pay the same amount as me each month, but instead of paying down a loan he loses everything to a landlord. And in addition I also get to deduct the ~rents~ interest.
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sokoloff 1991 days ago
I'm not sure what you mean by "I also get to deduct the rents", but it doesn't match anything that I understand about the tax code.
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matsemann 1991 days ago
Lets say I pay $2000 each month in mortgage. Some of that is interest that I get to deduct on my taxes. So in practice I pay maybe $1700/month, and most of that is really me saving by building equity in my apartment.

Before I bought the apartment, however, I paid more than that in rent. And all that was money going to someone else. If anyone deserves a tax break, it's those not privileged enough to yet own their own home.

Edit: sorry, in my language "rente" is "interest", so I mixed them up and meant to say I get to deduct the interest part of my mortgage payment in my previous post. Probably where the confusion stems from.

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