WASHINGTON _ For decades, the ability to deduct the interest on a home mortgage has been one of the most untouchable sacred cows of the tax code.
It is particularly revered in Los Angeles and other areas with high real estate prices, where the annual tax savings can be the difference between being able to afford a house or continuing to rent.
Now, Republicans crafting legislation to overhaul the federal tax system and cut rates are considering placing new limits on the home mortgage interest deduction.
And thousands of Californians could feel the pain.
The move comes as GOP lawmakers and Trump administration officials already have proposed killing another break _ the deductibility of state and local taxes _ that benefits California residents more than those in any other state.
No one is talking about totally eliminating the deduction for mortgage interest. It has powerful backers in real estate agents and home builders, who maintain that such a move would cause a sharp downturn in the housing market and hurt broader homeownership efforts.
But Republicans have to target some significant tax breaks to help offset part of the lost revenue from a cut in corporate and personal tax rates.
The need to eliminate or scale back deductions increased after Republicans failed to repeal former President Barack Obama's health care law, which would have provided more budget flexibility to cut taxes.
Some liberals have long complained that the mortgage interest deduction largely benefits wealthier homeowners and would like to see it limited, but they want the savings to pay for more affordable housing.
The housing industry strongly opposes efforts to place new restrictions on the deduction, arguing that would lead to lower housing prices because there would be less of a financial incentive to buy instead of rent.
At the same time, Democrats from California and other states with high housing prices are gearing up to fight any change.
"I think that harming the ability for Americans to own their home is like attacking motherhood and apple pie," said Rep. Judy Chu, a California Democrat whose district includes Pasadena and much of the San Gabriel Valley.
"I represent a district with homes that are very high-cost, so they have even more reason to be concerned about it," Chu said.
Homeowners now are allowed to deduct interest paid on as much as $1 million of mortgage debt. Congressional Republicans and White House officials are looking at reducing the limit to $500,000, which would lead to billions of dollars more in federal revenue every year.
Homeowners still would be able to deduct interest on the first $500,000 of a mortgage, but would lose the deduction for interest paid on any amount above that level.
Most Americans would not be affected by such a change, either because they own their homes outright, their mortgages are less than $500,000, or they don't have enough deductions to file an itemized tax return.
But in states with high earners and pricey real estate, reducing the mortgage interest deduction would force hundreds of thousands of homeowners to pay more taxes.
"Limiting the mortgage interest deduction to $500,000 hurts the high-cost areas across the country, from Boston to San Francisco, from Miami to Los Angeles," said Gerald M. Howard, chief executive of the National Association of Homebuilders.
