Lowering the cap on the popular mortgage interest rate deduction will have only a small effect on the housing market, according to economist Robert Shiller.
Speaking to CNBC, Shiller said that the deduction, which is currently capped at $1 million for married couples filing jointly and $500,000 for individuals filing separately, is limited to a small percentage of taxpayers. Shiller said that most homeowners use the standard deduction instead.
Shiller said that the change to the mortgage interest rate deduction will have a perceived psychological impact, rather than a tangible one.
"This is part of American culture. It goes back to the American dream," he said. "It stands for something. It stands for 'the government is behind the homeowner.' It's a political thing."
Advertisement
Related Stories
Economics
Housing Share of GDP in Q1 2024 Rises Above 16%
The increase marks the first time GDP has surpassed 16% since 2022
Economics
Shelter Costs Drive Inflation Higher Than Expected in January
January Consumer Price Index data show inflation increased more than anticipated as shelter costs continue to rise despite Federal Reserve policy tightening
Economics
Weighing the Effects of the Fed's and Treasury's Latest Announcements
The upshot of the Jan. 31 announcements is that while mortgage rates will stay higher for longer, they're likely to hold steady
