No Mortgage Tax exemption in UK?

hello everyone,

I kind of remember that there is no such thing as Mortgage Tax exemption in UK, i.e. you get certain relief on your tax if you are paying a huge mortgage, which all of us do... Am I right?
I was trying to explain this to some friends who felt that this is unthinkable, which made me wonder if I was wrong?
Please advise. Thanks!

The UK abolished mortgage interest tax relief from 6 April 2000 because the only effects were:

1. It increased the profits of banks since mortgages were more attractive, and

2. It increased the overall price of real estate since purchase was subsided by the mortgage interest tax relief.

If you are a US citizen you could still however deduct your UK mortgage interest on your US tax returns.

There is tax relief on interest on buy to let mortgages, right?

thanks for the information!
if our pay is from UK and are mainly paying UK taxes, it doesn't really help that we could cut down US tax??
and the thing about tax relief on buy to let mortgages, doesn't it sum it up everything now in Uk--that you can benefit if you are rich (and can afford to buy a second house to let) but you don't gain if you are paying mortages for your own home!!

 

You may not realise but you do gain, because if mortgage interest was tax deductible then buying houses would be cheaper which would mean that UK real estate would be even more expensive overall!

That's why the UK stopped subsiding house puchases by giving mortgage interest tax relief.

I don't know if the deduction is of use on your US returns because I don't know enough about your circumstances but it will be of some benefit to some folks.

The UK abolished mortgage interest tax relief from 6 April 2000 because the only effects were:

1. It increased the profits of banks since mortgages were more attractive, and

2. It increased the overall price of real estate since purchase was subsided by the mortgage interest tax relief.

Would you say the same thing is happening in the U.S. to the present day because of being able to deduct mortgage interest?

I always figured buying a house would be the only event that would suddenly make it advantageous to itemize deductions.

You may not realise but you do gain, because if mortgage interest was tax deductible then buying houses would be cheaper which would mean that UK real estate would be even more expensive overall!

I don't find this entirely clear... Is such a price increase a result of increased demand?

hello everyone,

I kind of remember that there is no such thing as Mortgage Tax exemption in UK, i.e. you get certain relief on your tax if you are paying a huge mortgage, which all of us do... Am I right?
I was trying to explain this to some friends who felt that this is unthinkable, which made me wonder if I was wrong?
Please advise. Thanks!

Why is it unthinkable? There did used to be tax relief on the interest you pay.

But to me the 2 things are entirely seperate, I don't see why you should expect tax relief just because of the way you choose to spend your money after you've been taxed on your income.

Why is it unthinkable? There did used to be tax relief on the interest you pay.

But to me the 2 things are entirely seperate, I don't see why you should expect tax relief just because of the way you choose to spend your money after you've been taxed on your income.

Because the government wants to control how people spend their money. You can also take money out of a US IRA, without penalty, to pay for a house purchase, but you couldn't use it to pay for a holiday or expensive clothing. Tax regulations are a means of controlling consumer behaviour.