CBO Sees Little Gain in Cutting Mortgage Interest Deduction
Limiting interest deductions to the first $300,000 of home mortgages would affect fewer than 1 million families and do little to cut the federal deficit, congressional analysts said.</br></br>A proposal to cut the maximum deductible mortgage, now at $1 million, is one of several options being weighed by the Clinton administration. Another would limit a couple to t a $20,000 annual interest deduction and a single person to $12,000.</br></br>But neither would make a significant dent in the $300 billion-a-year budget deficit. The $300,000 limitation would cut the red ink by about $2.5 billion, the Congressional Budget Office said. The $12,000-$20,000 ceiling would save about $4 billion.</br></br>The $300,000 ceiling would be especially harmful in high-cost areas, the home-building industry said. "Half the new revenue would come from California,'' said David Crowe of the National Association of Home Builders.</br></br>Outright repeal of the mortgage deduction would reduce the deficit by about $43 billionÛÓin theory. But opponents insist such a change would so upset the economy that the deficit would worsen.