Congressman Keith Ellison

Representing the 5th District of Minnesota

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Rep. Ellison Introduced Bill to Remove Marriage Penalty for Homeownership

Jan 17, 2017
Press Release

Last week, Rep. Keith Ellison (D-MN) introduced The Tax Benefit for Homeownership Clarification Act (H.R. 516). The bill clarifies tax law so that single people and married people receive an equal tax benefit for homeownership.

This clarification is needed because of a Ninth U.S. Circuit Court of Appeals decision determined that unmarried people who own a home together can EACH deduct interest on up to $1.1 million in mortgage debt but married couples can only deduct half of that amount.

This 2015 decision reversed a 2012 tax court decision and an IRS position that said unmarried co-owners, like married ones, were jointly subject to the $1.1 million limitation.

In response, H.R. 516 clarifies that an individual may deduct interest on a mortgage of up to $500,000 whether or not she is married.

“The tax benefits for homeownership are already extremely generous to the highest-income families,” said Rep. Keith Ellison. “Providing double benefits to unmarried co-owners seems excessively generous when half of renters, and nearly all low-income renters, struggle to find affordable rent.”

The mortgage interest deduction remains one of the most expensive federal tax benefits; the mortgage interest deduction costs the Treasury about $70 billion (0.4 percent of GDP) per year. More than three quarters of the tax benefits of the mortgage interest deduction go to families earning more than six figures a year. In fact, half of households with a mortgage, do not claim the deduction, as they do not itemize their taxes.

According to the Census Bureau, there are about 75 million owner-occupied homes in the U.S. Only 2% have a value of $1 million or more, and only 8% have a value between $500 000 and $1 million. Of course, mortgage amounts are less than the value of the property so this bill retains the tax benefit for homeownership, just shrinks it slightly resulting in a smaller tax break for the very few non-married couples or individuals with mortgages above $500,000.