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Americans Give Mixed Marks To Limits On Mortgage Tax Deduction

President Obama’s bipartisan deficit reduction commission is considering a radical overhaul of one of the most sacred of sacred cows – the income tax deduction on interest paid on home mortgages. Americans are narrowly divided when asked about possible ways to limit that deduction.

A new Rasmussen Reports national telephone survey finds that 41% of Adults favor limiting the income tax deduction a homeowner can take only to the first $500,000 of any home mortgage, but 38% oppose any such cap. Twenty-one percent (21%) are not sure. (To see survey question wording, click here.) 

Currently, the cap for deduction purposes is $1 million.

Another alternative is to limit the mortgage income tax deduction to the size of the average home mortgage, although it is important to note that Rasmussen Reports did not put a dollar value on “average.” Forty-seven percent (47%) of Americans favor limiting the mortgage deduction to the size of the average home mortgage, while 40% oppose such a limit. Thirteen percent (13%) are not sure.

The commission is considering converting the mortgage deduction to a 12% non-refundable tax credit with a cap of $500,000, but the National Association of Realtors and others are strongly opposed to any such changes at a time when the housing market is severely depressed. The deficit commission is expected to approve final recommendations on Friday for forwarding to Congress and the president.

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The survey of 1,000 Adults nationwide was conducted on November 30-December 1, 2010 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology. 

Are investors receptive to one or both of the proposals for limiting the mortgage tax deduction? What’s the partisan divide on these ideas? Become a Platinum member and find out.

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