Experts favor eliminating mortgage interest deduction

A majority of the nation’s leading economists, real estate experts and investment strategists say eliminating or drastically changing the mortgage interest deduction would benefit the country’s economic outlook.

The deduction, once felt to be “in stone,” is now used by fewer than 30 percent of all taxpayers.

The quarterly survey, conducted between August 30-September 14, 2012 by research and consulting firm Pulsenomics LLC on behalf of Seattle-based Zillow, asked 113 real estate analysts about the deduction and a variety of other housing components.

Respondents overwhelmingly favored changes to the mortgage interest deduction. Ten percent believe it should be eliminated as soon as possible; 50 percent believe it should be eliminated, but phased out gradually; and 30 percent believe it should remain, but that more restrictions should be placed on eligibility. Only 11 percent believe it should remain as-is.

“Although the mortgage interest deduction remains enormously popular with existing and aspiring homeowners, it costs the federal government about $90 billion a year,” said Terry Loebs, Pulsenomics LLC founder. “Time will tell whether the unprecedented fiscal challenges facing the U.S. coupled with a housing market now on the mend will embolden more policymakers to touch this lightning rod.”