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Interesting Fact on Tax Treatment of Housing

By: Gerald Prante

As the mortgage “crisis” continues to garner attention from policymakers seeking to do something to help out homeowners including possible use of the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. code, here’s an interesting fact to remember for those complaining about federal policies towards housing courtesy of CBO:

Effective Tax Rate on Capital Income = 13.8 percent

Effective Tax Rate on Capital Income Derived from Owner-Occupied Housing = 5.1 percent

Yes, that’s a negative effective tax rate. For a good commentary on a recent proposal from the Treasury Department to have the tax code enter the bailout discussion, read this from Howard Gleckman of the Urban Institute.

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