The mortgage interest deduction, however, is now at risk, due to negotiations over the so-called "fiscal cliff"—the year-end deadline for large spending cuts and the expiration of tax cuts.
While it is impossible at this point to know what the outcome will be, it is certainly worth running through the possibilities.
First, let's do a primer on the deduction as it stands now:
The deduction lets homeowners reduce their taxable income by the amount of interest paid on their mortgage. This can be on the principal residence or a second home, but not on mulitple investment properties. Taxpayers are eligible for this deduction only if they itemize. Finally, the interest deduction is capped at $1 million of your mortgage.
This deduction, which is the largest housing-related subsidy in the U.S. tax code, reduced income-tax revenue by $79.9 billion in fiscal year 2007, according to the Office of Management and Budget.