5 ms·

Personally I don't see any reason to provide a mortgage interest deduction for homes, but any US politician who suggested removing it would be roundly ejected f

by tsotha 11y ago

Personally I don't see any reason to provide a mortgage interest deduction for homes, but any US politician who suggested removing it would be roundly ejected from office immediately, both because home buyers are used to the benefit and because it would align that politician against powerful interests (construction, banking, and the money managers in government). So as an intellectual exercise... yeah, sure. And there are probably deductions businesses take that could be curtailed. But politics is the art of the possible, and removing the mortgage interest deduction in the US ain't ever going to happen.

olau 11y ago
That's why you need to be more sneaky about it. In Denmark you used to be able to deduct interest 100% as far as I'm aware. According to http://da.wikipedia.org/wiki/Rentefradrag http://da.wikipedia.org/wiki/Rentefradrag it's then been gradually decreased from 73% in 1987 to 32% in 2001. And there's a plan to decrease it further, although it is, as you point it, a really hot topic every time it comes up - "driving people from their homes" and similar headlines.
- olau 11y ago
  I should perhaps add that in Denmark there's an academic economic elite of researchers (with titles as "wise men", no kidding) that get a lot of attention from the press, and since the set of people elected to the parliament in many cases have a Master's degree in economic or state science where these people teach, their advice is taken really seriously. For instance, the current government which is nominally social-democratic did some pretty serious cuts to various tax-funded welfare programmes, on the advice of the wise men, to the dismay of their voters.
  - tsotha 11y ago
    We don't have group like that in the US. I'm not sure it would matter even if we did.
    - hessenwolf 11y ago
      Oh, but the funded think-tanks?
      - tsotha 11y ago
        Nobody cares what they think, really. They get quoted because the media has to have something to write about. I suspect property values would drop if they removed the exemption, which would make a whole lot of people very unhappy.
rjsw 11y ago
The experiment has already been done in the UK. House buyers stopped being able to get a tax deduction on their mortgage interest in 2000 [1], people still buy houses today. The problem in the UK is that companies can still deduct the mortgage interest, this puts people who buy property to rent out at an advantage. [1] https://en.wikipedia.org/wiki/Mortgage_interest_relief_at_source https://en.wikipedia.org/wiki/Mortgage_interest_relief_at_so...
- timoth 11y ago
  > The problem in the UK is that companies can still deduct the mortgage interest, this puts people who buy property to rent out at an advantage. Not just companies in the usually-understood sense; private landlords can deduct mortgage interest on the property they let as an expense to reduce their tax bill. No need to set up a company or actually declare yourself as self-employed or whatever. (Conceptually they are running a business, but there's no need for a company.)
- rahimnathwani 11y ago
  People who buy property to rent out also have to pay tax on the rental income. It's just like any other business. You pay tax on your profit (revenue less costs). In this case interest just happens to be one of the costs. I'm not sure what you mean when you say these people have an 'advantage'?
  - groks 11y ago
    > I'm not sure what you mean when you say these people have an 'advantage'? People who buy-to-let are not in the rental-income business, they are in the business of acquiring property, because property prices are sky rocketing. People with a job trying to get on the property ladder pay mortgage interest with wages. People with second, third etc. properties deduct mortgage interest as an expense.

by tsotha 11y ago

olau 11y ago

That's why you need to be more sneaky about it. In Denmark you used to be able to deduct interest 100% as far as I'm aware. According to http://da.wikipedia.org/wiki/Rentefradrag http://da.wikipedia.org/wiki/Rentefradrag it's then been gradually decreased from 73% in 1987 to 32% in 2001. And there's a plan to decrease it further, although it is, as you point it, a really hot topic every time it comes up - "driving people from their homes" and similar headlines.

olau 11y ago
I should perhaps add that in Denmark there's an academic economic elite of researchers (with titles as "wise men", no kidding) that get a lot of attention from the press, and since the set of people elected to the parliament in many cases have a Master's degree in economic or state science where these people teach, their advice is taken really seriously. For instance, the current government which is nominally social-democratic did some pretty serious cuts to various tax-funded welfare programmes, on the advice of the wise men, to the dismay of their voters.
- tsotha 11y ago
  We don't have group like that in the US. I'm not sure it would matter even if we did.
  - hessenwolf 11y ago
    Oh, but the funded think-tanks?
    - tsotha 11y ago
      Nobody cares what they think, really. They get quoted because the media has to have something to write about. I suspect property values would drop if they removed the exemption, which would make a whole lot of people very unhappy.

rjsw 11y ago

The experiment has already been done in the UK. House buyers stopped being able to get a tax deduction on their mortgage interest in 2000 [1], people still buy houses today. The problem in the UK is that companies can still deduct the mortgage interest, this puts people who buy property to rent out at an advantage. [1] https://en.wikipedia.org/wiki/Mortgage_interest_relief_at_source https://en.wikipedia.org/wiki/Mortgage_interest_relief_at_so...

timoth 11y ago
> The problem in the UK is that companies can still deduct the mortgage interest, this puts people who buy property to rent out at an advantage. Not just companies in the usually-understood sense; private landlords can deduct mortgage interest on the property they let as an expense to reduce their tax bill. No need to set up a company or actually declare yourself as self-employed or whatever. (Conceptually they are running a business, but there's no need for a company.)
rahimnathwani 11y ago
People who buy property to rent out also have to pay tax on the rental income. It's just like any other business. You pay tax on your profit (revenue less costs). In this case interest just happens to be one of the costs. I'm not sure what you mean when you say these people have an 'advantage'?
- groks 11y ago
  > I'm not sure what you mean when you say these people have an 'advantage'? People who buy-to-let are not in the rental-income business, they are in the business of acquiring property, because property prices are sky rocketing. People with a job trying to get on the property ladder pay mortgage interest with wages. People with second, third etc. properties deduct mortgage interest as an expense.