In 2007, newly elected President Nicolas Sarkozy proposed creating the deduction as part of his legislative plan for sparking the French economy.
[10] In August 2007, the Constitutional Council, the highest court in France, struck down the mortgage interest deduction as unconstitutionally creating a tax advantage that goes far beyond its stated goal of encouraging non-homeowners to buy homes.
[11] Home loan interest portion is deductible (under section 24(b)) up to 150,000 rupees in a tax year for acquiring or constructing a property.
Still in place currently, the mortgage interest tax deduction is subject to fierce debate, and a political issue during most recent elections.
[17] Many reasons for abolishment have been identified, often fuelled by a political ideology (e.g. creating house price inflation, limiting government earnings in times of economic downturn, mortgage interest tax deduction is increasing already high tax levels in the Netherlands, benefiting high income individuals more disproportionally).
[24] The fact that the government in effect subsidises 25% of the interest bill has made home ownership highly beneficial in Norway, and critics argue that the deduction has increased the cost of real estate.
However, in 1969 the then Chancellor of the Exchequer, Roy Jenkins, ended this tax relief for all loans except for business purposes or for home buyers.
Reductions during the 1990s in the amount of tax relief that was included with MIRAS loan repayments gradually cut its value until it was abolished in 2000 by the then Chancellor Gordon Brown.
Prior to the Tax Reform Act of 1986 (TRA86), the interest on all personal loans (including credit card debt) was deductible.
§ 163(h) of the Internal Revenue Code, the United States allows a home mortgage interest deduction, with several limitations.
"[37] The Tax Foundation, by contrast, argues that few low- and middle-income taxpayers benefit from the deduction,[38] calling it a subsidy for the real estate industry.
[39] Alan Mallach, a senior fellow at the Center for Community Progress and a visiting scholar at the Federal Reserve Bank of Philadelphia, argues that the deduction artificially inflates home prices.
[41] Economist Edward Glaeser remarked in The New York Times that the policy "is public paternalism at its worst" and wrongfully "encourages people to leave urban areas" as well as to borrow as much as possible to bet on housing.
Brown; Reagan domestic policy advisor Bruce Bartlett; and libertarian economist Daniel J. Mitchell unanimously opposed the federal mortgage interest deduction.