In October, 2005, President Bush's Advisory Panel on Federal Tax Reform made recommendations to eliminate this deduction for persons paying interest on larger mortgages. The limit was set at $313,000, the current maximum limit for Federal Housing Administration loan guarantees. The panel has also recommended the elimination of the deduction for residential property taxes. Under current law, itemizing taxpayers may deduct interest on acquisition and home-equity loans for a qualified residence. Homeowners may write off interest on acquisition loans on balances of up to $1 million and home-equity debt up to $100,000.

According to a study that's likely to come in handy should lawmakers go after the heretofore untouchable deduction for mortgage interest, 35 million taxpayers claimed $338 billion in mortgage interest deductions on their 2003 federal tax returns. And, 39 million owners claimed $119 billion in property taxes.

Because the mortgage and tax write-offs are used widely and expansively across the nation they should be somewhat protected for tax reformers. Unfortunately, there's a lot to defend. Linda Gould, senior tax policy representative at the National Association of Realtors, believes the property tax is probably the safest benefit. But the interest deduction for home-equity loans and mortgages on second homes could be vulnerable.