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Homeowners make use of tax deductions

July 24, 2006|by JIM WOODARD/Copley News Service

Politicians who propose abolishing or reducing special tax deductions for homeowners do so at their peril. Those deductions are the most widely used and important preferences in the federal tax code for homeowning voters, it was revealed in a recent study.

The average amount of mortgage interest deducted among each tax filer is now $9,650, according to the study released by the National Association of Home Builders. For those who deducted real estate taxes, the average amount for those per-filer deductions is a bit more that $3,000.

The report provides an in-depth analysis of the local use of mortgage interest and real estate deductions in each of the 435 congressional districts nationwide, using the most recent Internal Revenue Service data available. The study found that every state has at least one congressional district that had a minimum of $259 million of mortgage interest and $43 million of real estate taxes deducted.

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"Because the mortgage interest and real estate deductions significantly reduce federal tax liabilities for homeowners, they are important tools for promoting homeownership," said Jerry Howard, the association's executive vice president. "The report shows that millions of working families across the nation use and depend on these important tax incentives to help them maintain their current standard of living."

The study also showed that the average congressional district contains about 80,000 taxpayers who use the mortgage interest deduction, and 88,000 families who deduct real estate taxes. This illustrates the widespread use of these middle-class tax preferences.

On average, about 35 million taxpayers utilize the mortgage interest provision and deduct a total of about $338 billion - or an average of $9,650 per household. About 39 million taxpayers deduct an aggregate of $119 billion in real estate taxes, or an average deduction of more than $3,000 per household.

Higher mortgage interest deductions occur in areas with rapidly growing populations and exceptionally high home prices. California posted the highest average, at about $14,000 per taxpayer. The 14th district of California, encompassing parts of San Mateo, Santa Clara and Santa Cruz counties, ranked first with an average of about $35,000 per household.

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