About a month ago, my colleague Cameron penned an article about the Mortgage Interest Deduction – namely, whether it is a good idea or not. For an itemizing taxpayer in the 25% bracket, he pointed out, “The bank receives 4.0% interest, the homeowner pays 3.0% and the taxpayer is left footing the 1.0% difference.” Right – and the bank ends up pocketing the subsidy.
Now, politically, the mortgage interest deduction is a sacred cow. In 2009, 26% of all tax returns had some mortgage interest itemized – a whopping 36,541,820 returns, in total. How did it break down? Well, let me present it for you graphically by income bracket. Again, this is 2009 IRS tax data.
So, there you have it… as you move up the income brackets, more and more returns take the deduction. I suppose that’s not that incredible of a result, but it is interesting to take a look at the percentage of returns in each bracket, relative to other brackets.
What do you think about the mortgage interest deduction?