Report: Key Mortgage Tax Break Just Helps the Wealthy Lawmakers are fiercely protective of popular interest deduction By Kevin Spak, Newser Staff Posted Mar 24, 2014 2:49 PM CDT 103 comments Comments This undated photo shows a mansion that, at the time, was for sale. (AP Photo/ TK Images) (Newser) – The tax code is rife with home ownership incentives that are both popular with voters and staunchly defended by lawmakers. But it turns out the breaks mostly just help rich people buy pricier houses, according to a new report from the right-leaning R Street Institute. They "don't encourage homeownership in any meaningful way," the study's author tells the Wall Street Journal. "People just end up buying larger homes." He estimates that in Washington, DC, the subsides have increased the average home size by 1,400 square feet. What's more, the tax breaks are mainly going to the wealthy; homeowners with incomes above $100,000 are four times as likely to claim the benefit as those earning less, because low earners rarely itemize their deductions. It's the kind of report that can anger the right and the left alike. Matt Welch at Reason calls the tax breaks an "upper class entitlement," while Hamilton Nolan at Gawker calls it a "grotesque policy outcome." Barack Obama has repeatedly called for making the benefit available only to those making less than $200,000 a year.