The U.S. Internal Revenue Service (IRS) provides tax deductions for mortgage interest paid on both new and used homes by homeowners across the country. Utilizing the principle of economic incentives and their potential for unintended consequences, address the following points. Explain all in full.

a. What incentive does this give to U.S. residents?

b. Does it affect the type, style, or location of homes preferred by prospective home buyers?

c. What might happen to home values if the deduction were ever eliminated?

Answer rating: 100% (QA)

a As we all know housing is one of the key drivers in economic growth in US Tax deductions for mortg... View the full answer