Report Finds Wide Use of Home Owner Tax Preferences
In 2003, the average home mortgage interest deduction averaged $9,650 among the 35 million households who claimed it on their tax returns, and an average of $3,000 was reported by the 39 million who deducted their real estate taxes, making these two of the most widely used and important preferences in the federal tax code, according to a new NAHB study.
Using the most recent IRS data available, the report provides an in-depth analysis of the use of the mortgage interest and real estate deductions in each of the 435 congressional districts across the country.
Every state had at least one congressional district where a minimum of $259 million in mortgage interest and $43 million in real estate taxes were deducted in 2003, the report found.
“Because the mortgage interest and real estate deductions significantly reduce federal tax liabilities for home owners, they are important tools for promoting homeownership,” said Jerry Howard, executive vice president and CEO of NAHB. “The report shows that millions of working families across the nation use and depend upon these important tax incentives to help them maintain their current standard of living.”
According to the findings, the average congressional district had roughly 80,000 taxpayers who used the mortgage interest deduction and 88,000 families who deducted real estate taxes, illustrating the widespread use of these important middle-class tax preferences.
Nationwide, a total of $338 billion in home mortgage interest and $119 billion in real estate taxes were deducted in 2003.
Mortgage interest deductions were highest in areas with rapidly growing populations and expensive housing, such as California, where the deduction averaged roughly $14,000 per taxpayer, the highest of any state in the country. The deduction averaged about $35,000 per household in California’s 14th district — which encompasses parts of San Mateo, Santa Clara and Santa Cruz counties — and that was the highest amount locally.
In the six congressional districts where the most deductions were taken, all of which are in California, more than $15.5 billion in home mortgage interest was claimed. At the other end of the spectrum, the five congressional districts accounting for the smallest amounts of the deduction were all located in the New York City area, where renters exceed home owners by a wide margin.
About $64.9 billion in mortgage interest was deducted in California, followed by:
- New York, $19.7 billion
- Florida $17.6 billion
- Texas $16 billion
- Illinois $15.9 billion
- New Jersey $12.9 billion
- Michigan $11.5 billion
- Virginia $11.3 billion
- Ohio $10.9 billion
- Pennsylvania $10.8 billion
- Georgia $10.6 billion
Higher real estate tax deductions occurred in areas with high home prices and tax rates:
- New Jersey, with an average real estate tax deduction of $6,000
- New York $5,181
- New Hampshire, $4,830
- Connecticut $4,769
- Texas, $4,501
- Illinois, $4,129
- Vermont $3,845
To read the report, which includes more detailed information, click here.
In-depth economic analysis, key data and housing forecasts are available to subscribers of www.housingeconomics.com. Annual subscriptions start at $195 for NAHB members and $295 for non-members.
For more information, e-mail Liz Warin at NAHB, or call her at 800-368-5242 x8495.