Read the original article by C. Eugene Steuerle on Tax Policy Center.
There are many benefits to a first-time homebuyer tax credit, such as the one proposed by President-elect Joe Biden. However, the transition from the current deduction- or exclusion-based system of homeownership support would not be simple. Here are some of the issues that Congress would need to address:
Is there still a need for a mortgage interest deduction and, if so, for whom?
Limiting the home mortgage interest deduction (MID) reduces the current tax benefit from homeownership only for those with interest payments on a home mortgage. For any net equity in a home (asset value in excess of loan value), the “return” in the form of rental saving remains fully excluded from income or tax-exempt. Rent payments, on the other hand, are made entirely from after-tax income…