Question
Federal Government > Tax > Mortgage Tax Relief
Create a universal mortgage credit of 10 percent of interest payments, even for taxpayers who do not itemize their tax deductions
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Background
An approximate formula for the monthly cost of owning a home is obtained by computing the monthly mortgage, property tax, and maintenance costs, accounting for the U.S. tax deduction available for mortgage interest payments and property taxes.
A tax deduction or a tax-deductible expense represents an expense incurred by a taxpayer that is subtracted from gross income and results in a lower overall taxable income. In everyday terms, this means that tax-deductibility increases a person's purchasing power (if the person is paying taxes), by ""adding money"" to the purchase that would have otherwise gone to taxes.
A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. Because tax deductions reduce taxable income, and taxes owed are a percentage of taxable income, then tax deductions offer a fractional reduction in taxes owed.
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Tax credits, on the other hand, come directly out of the taxes owed, saving the taxpayer one dollar for each dollar of credit. Tax credits may be characterized as either refundable or non-refundable, or equivalently non-wastable or wastable. Refundable or non-wastable tax credits can reduce the tax owed below zero, and result in a net payment to the taxpayer beyond their own payments into the tax system, appearing to be a moderate form of negative income tax. Examples of refundable tax credits include the earned income tax credit and the additional child tax credit in the U.S.
see more on Wikipedia
A tax deduction or a tax-deductible expense represents an expense incurred by a taxpayer that is subtracted from gross income and results in a lower overall taxable income. In everyday terms, this means that tax-deductibility increases a person's purchasing power (if the person is paying taxes), by ""adding money"" to the purchase that would have otherwise gone to taxes.
A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. Because tax deductions reduce taxable income, and taxes owed are a percentage of taxable income, then tax deductions offer a fractional reduction in taxes owed.
see more on Wikipedia
Tax credits, on the other hand, come directly out of the taxes owed, saving the taxpayer one dollar for each dollar of credit. Tax credits may be characterized as either refundable or non-refundable, or equivalently non-wastable or wastable. Refundable or non-wastable tax credits can reduce the tax owed below zero, and result in a net payment to the taxpayer beyond their own payments into the tax system, appearing to be a moderate form of negative income tax. Examples of refundable tax credits include the earned income tax credit and the additional child tax credit in the U.S.
see more on Wikipedia
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