[quote=Nor-LA-SD-guy]All this would do is put more money into the hands of people who invest in cash flow rentals,

OK more people would probably rent instead of buy and that may drive down property price for a while, but in the end it will just put more money into cash flow rental investors.

Choose your poison …[/quote]

Good point … amd this is a point people fail to grasp.

Currently, the price point at which a home makes financial sense as owner occupied is higher than when considered as a cash flow rental. If the owner occupied mortgage deduction is eliminated, the price point at which property becomes favorable to own as a rental will kick in at a higher price point than where it pencils out as owner occupied. In the long run this does not favor renters who would-be owners. In fact it would raise the differential between renting and owning. The reason is that interest is accounted as a business expense, not a deduction. The long-term equilibrium would tend to favor investors rather than renters who seek to become future owners.