Homeownership Tax Breaks: 5 Year Cost $1 Trillion , $250 Billion Annually by 2012.

With the federal budget season coming upon us and HUD budget restrictions likely, I thought it would be interesting to build on the work of the excellent Urban Institutes December 2007 analysis of housing subsidy costs , direct and indirect, found HERE.

For my analysis I focused only on the indirect tax revenue lost at the federal level because of home ownership tax deductions using FY 2008-2012 (UI had used FY 2006). Note that states lose additional revenues because of home ownership related tax deductions built into state tax laws--those losses are not included in my analysis.

I took the existing federal tax breaks for home ownership listed by OMB in their FY 2008 budget package and added in recent CBO projected costs for recent additional tax breaks that extended the mortgage insurance deduction and created a new mortgage debt relief deduction. Links to both source are included in my analysis.

My analysis can be found in the graph and table HERE as a 2 page PDF file. The analysis shows that:

• Home ownership related tax expenditures are projected to climb by 40% from FY 2008-2012.
  
• For the five years FY 2008-2012 , home ownership tax breaks are projected to reduce federal revenue by $1 Trillion.
• By 2012, home ownership tax breaks are projected to reduce federal revenues by nearly $250 billion a year.
  

[Personal thanks to Gillian Reynolds at the Urban Institute for providing me the OMB source location for their prior analysis].