Unlock the Benefits of the Mortgage-Interest Deduction

### What does the Mortgage-Interest Deduction aim to encourage? - [x] Purchasing a house - [ ] Investing in the stock market - [ ] Buying government bonds - [ ] Taking out personal loans > **Explanation:** The mortgage-interest deduction aims to encourage homeownership. By allowing taxpayers to deduct the interest paid on their mortgage from their taxable income, the government makes buying a home more financially attractive. The goal is to create a stronger housing market, which in turn supports a stronger overall economy. ### What part of mortgage payments can be deducted from taxable income with Mortgage-Interest Deduction? - [ ] The principal portion of payments - [x] The interest portion of payments - [ ] The total amount paid, including fees - [ ] The insurance costs > **Explanation:** With the mortgage-interest deduction, taxpayers can reduce their taxable income by the total dollar amount of interest they paid on their mortgage that year. The deduction applies only to the interest portion of the mortgage payments, not to the principal or any other associated costs. ### Why does the U.S. government offer the Mortgage-Interest Deduction? - [ ] To discourage renting - [ ] To ensure banks earn profits - [x] To incentivize homeownership and strengthen the economy - [ ] To lower property taxes > **Explanation:** The U.S. government offers the mortgage-interest deduction to incentivize homeownership. A strong housing market is considered a significant building block for a strong overall economy. By making homeownership more financially attractive through tax deductions, more consumers are encouraged to buy homes, thus supporting the housing market and the broader economy. ### Which of the following is NOT true about Mortgage-Interest Deduction? - [ ] It reduces taxable income - [x] It applies to the principal portion of mortgage payments - [ ] It encourages homeownership - [ ] It is a U.S. Federal tax code provision > **Explanation:** The mortgage-interest deduction applies only to the interest portion of mortgage payments, not to the principal. Taxpayers can reduce their taxable income by the amount of interest paid on their mortgage, which encourages homeownership and is a provision of the U.S. Federal tax code. ### How does the Mortgage-Interest Deduction impact home buyers financially? - [x] By reducing their taxable income - [ ] By increasing their mortgage payments - [ ] By reducing their monthly payments - [ ] By eliminating property taxes > **Explanation:** The mortgage-interest deduction impacts home buyers financially by reducing their taxable income. When taxpayers deduct the amount of interest paid on their mortgage from their taxable income, they potentially lower their overall tax bill, making homeownership more affordable. ### The Mortgage-Interest Deduction primarily aims to: - [ ] Increase mortgage rates - [ ] Support real estate agents - [x] Subsidize the cost of home ownership - [ ] Lower property insurance costs > **Explanation:** The primary aim of the mortgage-interest deduction is to subsidize the cost of home ownership. By allowing homeowners to deduct the mortgage interest they pay from their taxable income, the government lowers the financial burden of owning a home, thereby encouraging homeownership. ### Which government offers the Mortgage-Interest Deduction? - [ ] State governments - [ ] Local governments - [x] The United States Federal government - [ ] Foreign governments > **Explanation:** The mortgage-interest deduction is a provision offered by the United States Federal government. This deduction is intended to make homeownership more affordable for taxpayers by allowing them to deduct the interest portion of their mortgage payments from their taxable income. ### How does Mortgage-Interest Deduction benefit the overall economy? - [ ] By increasing interest rates on home loans - [ ] By inflating property prices - [x] By encouraging a strong housing market - [ ] By reducing the national debt > **Explanation:** The mortgage-interest deduction benefits the overall economy by encouraging a strong housing market. When more people buy homes, it stimulates economic activity across multiple sectors, such as construction, real estate, and home goods, thereby supporting economic growth. ### What portion of mortgage payments directly lowers the total amount of money still outstanding on the loan? - [x] The principal portion - [ ] The interest portion - [ ] Both principal and interest portions - [ ] Only additional fees included in the payments > **Explanation:** The principal portion of mortgage payments directly lowers the total amount of money still outstanding on the loan. The interest portion represents the cost of borrowing money, which is what can be deducted under the mortgage-interest deduction. ### What is the Federal tax benefit referred to that home owners in the U.S. may avail to reduce their taxable income? - [ ] Capital Gains Exclusion - [x] Mortgage-Interest Deduction - [ ] Depreciation Deduction - [ ] Property Tax Deduction > **Explanation:** The mortgage-interest deduction is the Federal tax benefit that allows homeowners in the U.S. to reduce their taxable income by the amount of interest they pay on their mortgage. This benefit encourages homeownership and contributes to a stronger housing market.