The mortgage interest deduction and its impact on homeownership decisions
Hilber, C. A. L.
& Turner, T. M.
(2010).
The mortgage interest deduction and its impact on homeownership decisions.
(SERC Discussion Papers SERCDP0055).
Spatial Economics Research Centre (SERC), London School of Economics and Political Science.
& Turner, T. M.
(2010).
The mortgage interest deduction and its impact on homeownership decisions.
(SERC Discussion Papers SERCDP0055).
Spatial Economics Research Centre (SERC), London School of Economics and Political Science.
This paper examines the impact of the combined U.S. state and federal mortgage interest deduction (MID) on homeownership attainment, using data from 1984 to 2007 and exploiting variation in the subsidy across states, over time and due to inter-state moves. We test whether capitalization of the MID into house prices offsets the positive effect on homeownership. We find that the MID only boosts homeownership attainment of higher income households in less tightly regulated housing markets. In more restrictive places – typically larger coastal cities – an adverse effect exists. The MID is an ineffective policy to promote homeownership and improve social welfare.
Explore Further
- H22 - Incidence
- H24 - Personal Income and Other Nonbusiness Taxes and Subsidies
- H71 - State and Local Taxation, Subsidies, and Revenue
- R21 - Housing Demand
- R31 - Housing Supply and Markets
- R52 - Land Use and Other Regulations
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Hilber, C. & Turner, T.
(2014).
Replication data for: The Mortgage Interest Deduction and its Impact on Homeownership Decisions.
[Dataset]. Harvard Dataverse.
https://doi.org/10.7910/dvn/28100