Mortgage Interest Deductibility and Housing Prices
Over the past few years, there have been several proposals for replacing the income tax system with a system based on taxing consumption. Many of the proposed reforms include eliminating the deductibility of home-mortgage interest, but this provision raises a question: Since the deduction subsidizes home ownership, will eliminating it substantially reduce the value of owner-occupied housing?
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This work by Federal Reserve Bank of Cleveland is licensed under Attribution-NonCommercial 4.0 International
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