ABSTRACT
This chapter focuses on the importance of federal tax policy to housing. It details the different ways in which the federal government uses the tax code to subsidize homeowner and, to a much lesser degree, rental housing. Among other topics, it shows the extent to which tax subsidies for homeowner housing benefit affluent homeowners far more than households of more modest means. The key housing-related “tax expenditures” under discussion include the mortgage-interest deduction, property tax deductions, exemptions of capital gains from the sale of a principal residence, depreciation, and the low-income housing tax credit. The chapter examines the effect of the “Tax Cuts and Jobs Act” of 2017 on housing-related tax expenditures and that of the Tax Reform Act of 1987.
