Mortgage Interest Deduction - A Powerful Tool to Plan Income Tax
Home Sweet Home – The Dream Project of Every Individual
It is a dream project for every family man to acquire a home for his family and provide all the comforts that he possibly can. The current trend is to purchase a flat or a built up home by obtaining a home loan from a bank. One of the best sources is an authorized bank.
The loan is provided after devising a repayment plan which the home maker has to strictly comply with. After the purchase is made, there comes a time to repay the loan and the loan carries a home mortgage interest which is considerably high. The Mortgage Interest Deduction on the purchase of a home permits Income Tax payers the benefit of a reduction in their taxable income reducing the interest amount to be paid on the loan.
The International Scenario
A large number of countries normally do not allow the home mortgage interest deduction from the income of an individual. In the US, Netherlands and Switzerland, this mortgage interest deduction is permissible. The interest deduction laws vary from country to country. In countries such as Sweden, Belgium and Ireland, a small part of the mortgage interest deduction is only allowed.
Mortgage Interest Deduction – A Hope for Revitalization
Mortgage Interest Deduction has proved to be a powerful tool in the hands of the taxpayer where he has to pay lesser amount of tax to the government since the interest paid on home loan is reduced from the taxable income.
There has been a stiff opposition from the general public whenever the government contemplates on eliminating the reduction of the Mortgage Interest deduction from the taxable income of the home owner. By paying a higher rate of interest as mortgage, a tax payer is able to plan his tax payments effectively. The elimination has drawn widespread protests from the National Association of Realtors who anticipates a drastic decline in their businesses and an adverse effect on sale of properties.
Of late, Mortgage Interest Deduction has gained an unprecedented momentum. Estimates indicate there would be a steep decline in home ownerships and there will be fewer buyers of property in the wake of removal of this benefit from the homeowner. Real Estate companies strongly feel that if the present state continues, there are very bleak chances of economic recovery of the real estate business. The Federal Government on the other hand is on the look out for hiking their balance sheets both on the national and state levels.