The cost of one of the country’s most expensive individual tax breaks is shrinking as the number of Americans who own homes declines and mortgage rates hover near historic lows.

Federal tax filers claimed almost $71 billion less in mortgage interest deductions for 2009 than for 2007, a 14 percent drop, according to the Internal Revenue Service. That trend continued in 2010, the IRS said in a report last month, as preliminary data showed that lower interest rates, home ownership and home prices curbed use of the tax deduction by 7.2 percent.

“People are walking away and losing their homes and they no longer have the mortgage interest deductions,” said Andrew Hanson, an assistant professor of economics at Georgia State University who has researched the tax break. “That’s got to be a big part of it.”

Tax revenue fell as unemployment rose during the most severe recession since the 1930s, and the housing market was shaken by 16 million foreclosures since 2007. On the flip side were gains from declining use of the mortgage deduction, saving the U.S. government $13 billion to $26 billion from 2007 to 2010, according to an estimate from Hanson.

The home ownership rate in the U.S. dropped from a peak of 69.2 percent in 2004 to 65.9 percent in the second quarter of 2011, according to the U.S. Census Bureau. Median home prices fell more than 30 percent from July 2006 to January, according to data from the National Association of Realtors.

The mortgage interest deduction is projected to cost the federal government $464 billion in revenue from 2011 to 2015, according to the congressional Joint Committee on Taxation.

While popular with taxpayers, the deduction is often proposed for elimination by those seeking to reduce the federal budget deficit. The fiscal commissions of two presidents in 2005 and 2010 recommended scaling it back and replacing it with a tax credit. President Barack Obama’s budget proposal for fiscal 2013 would impose a cap that would limit the benefit of tax breaks, including the mortgage interest deduction, for high-income taxpayers.

At the federal level, the deduction is allowed for interest on mortgages up to $1 million for both primary and secondary residences. Only taxpayers who itemize can take the deduction. Some economists maintain that the deduction disproportionately benefits the wealthy and spurs people to take on more debt.

“Most economists don’t like it,” said Kim Rueben, senior fellow at the Tax Policy Center in Washington, a nonpartisan research group, noting that there is little evidence that the tax break spurs home ownership.

David Albouy, assistant professor of economics at the University of Michigan, says the deduction along with subprime lending are partly responsible for pushing people into homes they otherwise couldn’t afford. The decline in homeownership and the drop in the use of the deduction may be the home market righting itself, he said.