The Incidence of the Mortgage Interest Deduction: Evidence from the Market for Home Purchase Loans
AbstractThis article examines the incidence of the largest housing-related subsidy in the federal budget, the home mortgage interest deduction (MID). The author uses the difference in interest rates for loans made around the MID limit to identify the incidence of the subsidy. Using data on individual mortgages originated in 2004, the author estimates that for every $1,000 borrowed without the MID, the interest rate on the entire loan decreases by between 3.3 and 4.4 percent. Results suggest that lenders capture between 9 and 17 percent of the subsidy created by the home MID through higher mortgage interest rates.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by in its journal Public Finance Review.
Volume (Year): 40 (2012)
Issue (Month): 3 (May)
Contact details of provider:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gibbons, Stephen & Manning, Alan, 2006.
"The incidence of UK housing benefit: Evidence from the 1990s reforms,"
Journal of Public Economics, Elsevier,
Elsevier, vol. 90(4-5), pages 799-822, May.
- Steve Gibbons & Alan Manning, 2003. "The Incidence of UK Housing Benefit: Evidence from the 1990s Reforms," CEP Discussion Papers dp0597, Centre for Economic Performance, LSE.
- Stephen Gibbons & Alan Manning, 2003. "The incidence of UK housing benefit: evidence from the 1990s reforms," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 20011, London School of Economics and Political Science, LSE Library.
- Rosen, Harvey S., 1979. "Housing decisions and the U.S. income tax : An econometric analysis," Journal of Public Economics, Elsevier, Elsevier, vol. 11(1), pages 1-23, February.
- Anderson, John E. & Clemens, Jeffrey & Hanson, Andrew, 2007. "Capping the Mortgage Interest Deduction," National Tax Journal, National Tax Association, vol. 60(4), pages 769-85, December.
- Devereux, Michael P. & Lanot, Gauthier, 2003. "Measuring tax incidence: an application to mortgage provision in the UK," Journal of Public Economics, Elsevier, Elsevier, vol. 87(7-8), pages 1747-1778, August.
- Wheaton, William C, 1990. "Vacancy, Search, and Prices in a Housing Market Matching Model," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 98(6), pages 1270-92, December.
- Rosen, Harvey S., 1979. "Owner occupied housing and the federal income tax: Estimates and simulations," Journal of Urban Economics, Elsevier, vol. 6(2), pages 247-266, April.
- James M. Poterba, 1992.
"Taxation and Housing: Old Questions, New Answers,"
NBER Working Papers
3963, National Bureau of Economic Research, Inc.
- Poterba, James M, 1992. "Taxation and Housing: Old Questions, New Answers," American Economic Review, American Economic Association, American Economic Association, vol. 82(2), pages 237-42, May.
- James M. Poterba, 1983.
"Tax Subsidies to Owner-occupied Housing: An Asset Market Approach,"
Working papers, Massachusetts Institute of Technology (MIT), Department of Economics
339, Massachusetts Institute of Technology (MIT), Department of Economics.
- Poterba, James M, 1984. "Tax Subsidies to Owner-occupied Housing: An Asset-Market Approach," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 99(4), pages 729-52, November.
- Susin, Scott, 2002. "Rent vouchers and the price of low-income housing," Journal of Public Economics, Elsevier, Elsevier, vol. 83(1), pages 109-152, January.
- Wodon, Quentin, 2014. "Comparing Itemized Tax Deductions across States: A Simple Decomposition Applied to Mortgage Interest Deductions," MPRA Paper 56940, University Library of Munich, Germany.
- Ganong, Peter & Jäger, Simon, 2014. "A Permutation Test and Estimation Alternatives for the Regression Kink Design," IZA Discussion Papers 8282, Institute for the Study of Labor (IZA).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications).
If references are entirely missing, you can add them using this form.