In order to examine the price impact and income distribution effect of the ``home mortgage interest deduction of individual income tax" (hereafter abbreviated as HMID) policy, this paper considers the endogenous connection mechanism between the current residents' income and consumption, the demand pull between residents' consumption and production activities, and the price connection between tax changes and corporate production costs. Under the premise of those consideration, a partially closed input-output model reflecting the endogenous consumption of residents' consumption and individual income tax deduction mechanism was originally constructed. Using this model, this paper conducted a simulation evaluation of the HMID policy under a fixed deduction rate standard from a macro perspective. The study found that, compared with other income groups, taxpayers who purchase home mortgage from lower to upper-middle income level can obtain greater benefits in the HMID policy. However, after considering the possible price impact of the HMID policy from a macro perspective, it is found that the actual cost savings effect of this policy on home buyers with mortgage is much smaller than the results we get from micro perspective. Under the policy scenarios of different fixed deduction rate, the overall income distribution effect generated by the HMID policy will change to varying degrees, but the only executed HMID policy cannot effectively improve the current income distribution gap. Further increasing the proportion and scope of the benefited population can make the HMID policy better use for the income redistribution effect. Therefore, based on the results we got from our policy simulation, this paper make three policy suggestions: First, further improving the individual income tax deduction mechanism, appropriately expanding the scope of special expense deductions; second, optimizing the special expenses deduction standards, establishing the floating or fixed rate deduction standards; third, increasing the government transfer payments and providing diversified policy support portfolio to low-income groups.