Advocates are calling for the reform of the mortgage interest deduction (MID) in order to provide more resources to deeply targeted affordable housing.

Led by the National Low Income Housing Coalition (NLIHC), the United for Homes campaign released a report urging federal leaders to change the MID—a $70 billion tax write-off that primarily benefits higher-income households—and reinvest its savings to targeted affordable rental programs.

Diane Yentel
Diane Yentel

Reforming the Mortgage Interest Deduction: How Tax Reform Can Help End Homelessness and Housing Poverty says that approximately 70% of all taxpayers do not receive the MID and it does little to promote homeownership.

MID reform would help rebalance the nation’s housing policy. “… We as a nation spend more to subsidize the homes of the 7 million highest-income households with incomes above $200,000 than we do to help the 55 million households with incomes of $50,000 or less, even though these families are more likely to struggle to afford housing,” says the report, which cites research showing that 75% of the benefits of the MID go to the top 20% of earners.

Reform supporters want to lower the amount of a mortgage against which a tax break can be claimed from $1 million to $500,000 and convert the deduction to a 15% nonrefundable tax credit. The report shows that such changes would provide a tax break to 25 million lower-income homeowners and would generate $241 billion over 10 years to be reinvested to support affordable housing for those with the greatest needs through the National Housing Trust Fund and rental assistance programs.

“With the current shortage of over 7 million rental homes affordable and available for extremely low-income households, the affordable housing crisis in America must be addressed,” says Diane Yentel, NLIHC president and CEO. “Congress and the administration must act now to rebalance federal housing policy and reinvest the savings from MID reform into affordable housing programs for those with the greatest needs. Smart reforms and investments can end homelessness and housing poverty in America and provide all households the opportunity to achieve successful, healthy lives.”

Supporters have been making a compelling case, and recent news reports indicate that the White House may be open to an MID reduction as part of a tax reform package.

However, changing the tax break will likely be met with resistance from homeowners and others in real estate.

The National Association of Home Builders has called for preserving a meaningful tax incentive for homeownership through the MID. The association says the deduction is a middle-class tax break and is particularly beneficial to younger households and larger families.

The full report is available at