San Diego Law Review

Library of Congress Authority File


Document Type



This Comment argues that Congress should—in this order of preference—eliminate the mortgage interest deduction, replace it with a credit, or substantially modify it, and that Congress can adopt any of these policies without substantial short-term fallout in the housing market. Part II of this Comment examines how the mortgage interest deduction works, its history, and its intended benefits. Part III scrutinizes the deduction’s inability to achieve its primary objective—increasing homeownership—and examines its negative effects on housing prices, household indebtedness, the environment, and wealth disparity. Accordingly, this Part argues that Congress should reform the deduction, discusses three basic options available for doing so, and introduces the long-term and short-term considerations that Congress must account for when adopting a new policy. Part IV discusses each of Congress’s general options—eliminating the deduction, replacing it with a credit, or substantially modifying the deduction—and analyzes each option in light of continued housing market weakness. Ultimately, the analysis in Part IV concludes that Congress should reform the mortgage interest tax deduction by completely phasing it out over a number of years, with a trigger for the phase-out based on a metric of housing market health. Part V summarizes how completely phasing out the deduction will accomplish the twin objectives of long-term housing market health and accommodating the market’s current fragility.