Interest payments on home mortgages and home equity loans are tax deductible. This tax deductibility encourages households to
A) shift other forms of debt to their home mortgage.
B) increase the equity in their house.
C) make larger payments and pay down their mortgage loan more rapidly.
D) decrease the overall amount of household debt in relation to household income.

Question

Quizplus · Accepted Answer

The tax deductibility of interest payments on home mortgages and home equity loans incentivizes households to shift other forms of debt to their home mortgage to take advantage of the tax benefits.

Interest Payments on Home Mortgages and Home Equity Loans Are