[rogue yam]

The net result of eliminating it right now would be to further depress the price of homes.

Why should government be in the business of inflating real estate prices?

[Dr. Sivana]

Why should government be in the business of inflating real estate prices?

Keeping more of your money is not inflating prices. That is the same mindset that assumes it is all the governments money first. Taxing mortgage interest depresses the value. Why should government embark on a policy of charging people more for having a mortgage than they had been?

Right now, due to oversupply, houses are not overpriced. I build my own house. I know what every part of its construction cost. The houses that are already built (in many areas) are selling for less than the cost of the materials that went in to build them plus the cost of teh land (and we are not talking about expensive land areas; we paid $11K/acre, a smallish portion of the total cost).

If such a change were to be implemented as part of a larger tax overhaul, and not merely a tax increase on note-holding home-owners, it would have to be phased in so as not to shock the system.

[longtermmemmory]

Then how about a rent expense deduction for a primary residence.

Without that deduction you push income interest further down and banks out of the primary home lending business.