Nonbusiness Interest Deductions
GGD-86-53BR: Published: Mar 13, 1986. Publicly Released: Mar 13, 1986.
- Full Report:
GAO reviewed records for taxpayers who itemized their deductions in 1983 to assess the amount and distribution of the average home mortgage, credit card, and other nonbusiness interest deductions.
GAO found that: (1) 35.2 million taxpayers filed itemized tax returns for tax year 1983; (2) 72.7 percent of all itemizers claimed mortgage interest deductions; (3) for each income class represented, the amount of home equity greatly exceeded outstanding consumer credit; (4) although the tax reform proposals are designed to limit nonbusiness interest deductions, lending institutions have provided homeowners with the opportunity to use their home equity to secure loans for consumer purchases and nonbusiness investments; and (5) individual taxpayers can use home equity as a device to avoid limitations on nonbusiness interest deductions and deduct the related interest as home mortgage interest.