This post was mentioned on Twitter by taxgirl: More Sunday mailbag: http://bit.ly/1tdJSf...

A sudden and total end to the mortgage interest deduction would have been a disaster for many families who had recently bought homes in the early 1980s, because interest rates were so high back then, thanks to inflation. I still remember the first time my husband and I considered buying a house, in 1981. I called a few local banks to inquire about mortgage rates. Fixed rate mortgages were running as high as 18%. Shortly afterwards, there was an explosion of teaser one-year adjustables, but even they were in the low to mid teens. I never thought I’d lived to see the day when fixed rate mortgages would fall back to the levels we’ve seen in recent years!

Politically, especially given the strength and power of the real estate/construction industry, I do not think Reagan could have accomplished as much as he did without agreeing to preserve the tax breaks for homeowners. It’s timely to reflect on that industry’s power and influence as we look at the current debate over the extension of the temporary tax credit for home purchases.

However, I’m puzzled by your statement above about the “increase in the home mortgage interest deduction” under Reagan. I don’t remember any increases in the mortgage interest deduction under Reagan. In fact, I believe the Reagan tax laws limited the mortgage interest deduction.

I’m old enough to remember filing tax returns in which ALL interest was deductible, whether mortgage, credit card , auto loan, you name it. Even the interest people paid on late tax payments was deductible back then! And there was no limit on the mortgage interest deduction in the old days. Before the Reagan tax reforms, you could deduct all your mortgage interest, regardless of how many mortgaged houses you owned, regardless of the size of the principal that generated the interest, etc.