Do the Federal Income Tax Deductions for Home Ownership Benefit the Less Advantage and Average American Family?

Abstract

Americans have traditionally placed a high worth on the ability of ordinary families to purchase a home. Even after the devastating financial crisis and the housing bubble in late 2008, according to the September 2014 Country Financial Security Index Survey, more than 89 percent of Americans rank buying a home among the top in achieving American Dream. The financial benefit arising out tax deductions available to homeowners has aided the less advantaged and middle class in achieving this American dream. A simulated model is shown for three families with large home price and income level differences to illustrate the relative economic gains from the federal current tax code to the three families.