The U.S.federal government offers homeowners a tax deduction for their home loan interest payments.This reduction in taxes may have encouraged too many people to own a home.If the tax deduction caused people to buy who otherwise could not have afforded to own,the tax deduction serves as a(n)________ incentive.

Question

Quizplus · Accepted Answer

The tax deduction for home loan interest payments is an indirect incentive because it indirectly encourages homeownership by reducing the cost of borrowing for homeowners. This can lead to increased homeownership, but also may encourage those who may not have been able to afford homeownership without the tax deduction to enter the market, potentially leading to risky borrowing and lending practices.

The USFederal Government Offers Homeowners a Tax Deduction for Their Home