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I'm a homeowner and I think it's an absolute crime my mortgage interest is tax deductible yet rent isn't. If we believe, at a philosophical level, that interest

• kevin_thibedeau 8y ago
  Some states do permit tax deductions for rent. Indiana, New Jersey, and possibly others.
  • astura 8y ago
    Looked into this real quick. The maximum rental deduction in Indiana is capped at $3,000 and the income tax rate is a flat 3.23%. So a renter in Indiana only pays $97 less in taxes.
  • klipt 8y ago
    California has a (very small) tax credit for renters.
    • s73v3r_ 8y ago
      I believe it's only for lower income renters.
• orangecat 8y ago
  If we believe, at a philosophical level, that interest payments should be tax deductible, ok, then make ALL interest paid tax deductible - credit card, personal loans, auto loans, etc. Exactly. In fact all interest was deductible until the 1986 tax reform. Unfortunately the mortgage interest deduction survived due to lobbying from the real estate industry. with the new tax bill, 90+% of both owners and renters will be taking the standard deduction this year. It is my opinion that's a good thing. It's a very good thing for fairness, economic efficiency, and saving taxpayer time.
• mark212 8y ago
  The entire (expressly stared) reason to make mortgage interest deductable was to encourage more home ownership. You may disagree that that’s a desirable policy goal (and I might agree with you), but comparing it to some other payment that isn’t deductable misses the point entirely. Especially rent. Congress wanted to create an economic dis-incentive to being a renter and push people to own the homes they live in.
  • jsoc815 8y ago
    > The entire (expressly stared) reason to make mortgage interest deductable was to encourage more home ownership. IIRC it was actually to encourage more borrowing so that the banks could securitize and sell off the loans. Increased home "ownership" was/is the altruistic reason presented to the public so that they feel good about the whole thing. Not looking to start an argument here, but there are plenty of other ways to encourage "ownership" that don't require encouraging debt peonage and market inflation. Also when credit cards were first becoming a mainstream thing, the interest on that was also tax deductible. I forget the specifics about why it was deemed acceptable to dispense w/that tax break.
    • tzs 8y ago
      Both that and the encourage home ownership theory seem unlikely when it comes to why it was deductible in the first place. It became deductible in 1913, but simply because in 1913 all interest became deductible. The first $3k ($4k married) was excluded. Only the top 1% paid enough interest to take any deduction, and very little of that would have been mortgage interest because they usually bought their homes outright. Wikipedia claims that the reason they made interest deductible on personal income taxes was that in a nation of small proprietors the line is fuzzy between personal and business expenses, and it was simpler to just make it all deductible instead of just trying to allow business interest to be deducted. As for why credit card interest later became non-deductible, it is kind of the inverse of why mortgage interest is deductible. That is just as mortgage interest became deductible because all interest became deductible, credit card interest became non-deductible because almost all interest became non-deductible. The Reagan tax reforms took away almost all such deductions except the mortgage deduction. As to why Congress decided to save the mortgage deduction when they were killing all the rest--I have no idea. That was in 1986, when a lot more than the top 1% were taking it, and most homes were bought using mortgages, so both the "encourage home ownership" theory and the "encourage more borrowing to please the banks" theories are plausible, at least.
• yesiamyourdad 8y ago
  I remember when credit card interest was federally deductible.