WASHINGTON — That most sacred of tax breaks, the mortgage interest deduction that has helped millions buy homes, could vanish if President Bush and Congress follow the recommendations of his tax advisory board.

Nine tax experts, tasked with developing simpler and fairer tax laws, concluded that the deduction does more for wealthier taxpayers than for people struggling to buy a home. But mortgage bankers and real estate agents see irreparable harm if the tax break disappears.

The National Association of Realtors estimated that housing prices could decline 15 percent, bad news for owners who have seen the value of their homes increase.

"You're going to be taking away from Middle America," said David Lereah, the association's chief economist, noting that values would drop for everyone regardless of whether the mortgage interest deduction was used. "You've just reduced the retirement nest egg for everyone."

The idea is a long way from becoming reality, and several lawmakers have already declared their opposition.

The current tax break lets homeowners deduct interest paid during the year on a mortgage up to $1 million and a home equity loan worth up to $100,000. Homeowners also benefit from breaks that let taxpayers deduct state and local property taxes from the federal bill.

Almost 36 million taxpayers claimed the deduction in 2003, according to the Internal Revenue Service.

The President's Advisory Panel on Federal Tax Reform urged the administration to do away with the deduction and replace it with a credit worth 15 percent of interest paid during the year. They would scrap the deduction for property taxes, too.

If enacted, mortgages eligible for the tax break would be limited by a formula reflecting the average regional price of housing. If in place today, that range would spread from $227,000 to $412,000. Mortgages for second homes and interest paid on home equity loans would not be eligible for the credit.

Taxpayers who currently own homes would have five years before they had to use the new credit. During that period of transition, a taxpayer could still take a deduction but the size of the mortgage eligible for a tax break would gradually fall. At the end of five years, everyone would be using the proposed credit.

Connie Mack, a former Florida senator and chairman of the tax panel, said less than 5 percent of mortgages in the nation exceed the proposed cap. "It is a fair plan. It shares the benefits," he said.

For homeowners with a small mortgage who don't itemize their deductions, the credit means a new tax benefit defraying the cost of housing.

Sheila Crowley, president of the National Low Income Housing Coalition, said it's time policymakers rethink a housing subsidy for people who don't need it.

"Changing it isn't going to decrease homeownership," she said. "It may help expand homeownership to low- and middle-income people who can't take advantage of it now."

Taxpayers who bought $1 million homes expecting a generous tax break could be in for a shock, said Michael Fratanponi, senior director of single family research and economics at the Mortgage Bankers Association.

"That's going to really bite," he said.