Tax Expenditures for Owner-Occupied Housing: Deductions for Property Taxes and Mortgage Interest and the Exclusion of Imputed Rental Income

Federal income tax policy affects the cost of homeowner ship for many households. Popular discussions of the favorable tax treatment of owner-occupied housing usually focus on the tax-deductibility of mortgage interest and prop? erty tax payments, as well as the specialized tax rules that affect housing capital gains. Academic discussions, in contrast, emphasize the exclusion of the imputed rental income on owner-occupied housing as the key tax benefit for homeowners. This paper summarizes the current distribution of the tax benefits associated with the mortgage interest and property tax deductions. It contrasts this with the distribution of tax benefits asso? ciated with the current tax regime for imputed rental income relative to one that taxes home?