Mortgage interest deduction on the line again

2012 budget would trim itemized deductions for the wealthy

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The Obama administration’s proposed 2012 budget would trim the value of itemized deductions for high-income taxpayers by nearly one-third, reducing the tax benefit some homeowners with mortgages receive if they itemize the interest portion of their loan payments on their tax returns.

The administration proposed such a measure as part of last year’s budget negotiations, but Congress did not approve it.

In this year’s budget message, President Obama pitched a cut in itemized deductions for the wealthy as a means for paying for the cost of protecting middle-class taxpayers from having to pay the Alternative Minimum Tax, or AMT.