Cohn: 'People don't buy homes because of the mortgage deduction'

White House National Economic Council Director Gary Cohn on Thursday pushed back against criticism that Republicans' tax plan could hurt the real-estate market, saying, "People don't buy homes because of the mortgage deduction."

"The No. 1 reason why people buy homes is they're excited and optimistic about the economy," Cohn said during a White House press briefing. "They have a job today, they feel confident they're going to have a job tomorrow, and their kids are going to get a job and their spouse has a job."

The mortgage interest deduction is currently among the most popular preferences in the tax code. It allows homeowners to reduce their taxable income by the amount of interest they've paid on their mortgage.

ADVERTISEMENT
The GOP tax plan unveiled Wednesday would protect the mortgage interest deduction but would decrease the number of homeowners likely to claim it, as the plan would nearly double the standard deduction. Taxpayers can only claim the mortgage interest deduction if they itemize their deduction instead of taking the standard deduction.

Cohn said that the majority of taxpayers already take the standard deduction. He also noted that the National Association of Home Builders (NAHB) came out in favor of the GOP's tax plan.

The statement from NAHB Chairman Granger MacDonald said that the framework "represents a positive step in the right direction," citing the plan's provisions to lower the tax rate for "pass-through" businesses and preserving the low income housing tax credit. MacDonald also said the group looks forward to working with policymakers on solutions to "mitigate any detrimental effects" that the larger standard deduction could have on the housing market.

Republicans have said that they want to overhaul the tax code in order to boost economic growth. 

"We have to get America back to a place where people feel excited and exuberant about the economy," Cohn said. "When they do that, they'll go out and spend money, they'll buy homes."