According to Pew, one of the largest of the tax code's expenditures is the deduction for home-mortgage interest. Tax filers who own a home and itemize their deductions are allowed to subtract from their income interest paid on mortgage debt.
In tax year 2011, filers deducted about $360 billion, "resulting in roughly $72 billion in forgone federal income tax revenue," the Pew study says.
Only two federal tax expenditures were larger that year, Pew says, "and in years past, this deduction has often ranked second behind the exclusion for employer-provided health insurance."
According to Pew, fewer than half of all homeowners and about a quarter of tax filers claim the deduction, available only to homeowners who itemize deductions.
The benefit increases with the size of the mortgage.
I had assumed that the real estate downturn had an impact on the total amount of deductions during those years.
Pew's study says total mortgage interest deducted by tax filers hit its peak in 2007, "resulting in $543 billion in deductions and roughly $85 billion in forgone revenue."
From 2007 to 2010, the total deduction amount fell 28 percent, and the number of claims declined by 12 percent.
The middle of the country was the least affected.
The percentage of tax filers deducting mortgage interest in 2010 ranged from a high of nearly 37 percent in Maryland to a low of 15 percent in West Virginia and North Dakota.
The U.S. average was 25.5 percent. Pennsylvania was at 20 percent to 25 percent. New Jersey was 32 percent and higher. Delaware fell in between, 26 percent to 31.9 percent.
The average U.S. deduction was $2,713 - Pennsylvania fell around there. New Jersey and Delaware were in the $3,000-to-$3,999 bracket.
Virginia, Maryland, and California had the three highest average deductions - $4,000 to $4,999.
Claims were highest in metropolitan areas, especially in the Boston-to-Washington corridor, the report shows.
In Pennsylvania, the highest percentage of claims were in the Philadelphia, Allentown-Bethlehem-Easton, and York-Hanover metro areas - 29 percent and above. The same three areas had the high deduction amounts: $2,800.
New Jersey and Delaware were not broken down in the Pew study.
According to National Association of Realtors' research, eliminating the mortgage deduction would cause a 15 percent decline in the value of homes nationwide.
On the House: Town by Town
In the Sunday Business section, Alan J. Heavens takes a look at real estate and life throughout the region. This week's focus: Medford.
Contact Alan J. Heavens at 215-854-2472, email@example.com or @alheavens at Twitter.