Mortgage interest paid to the note holder is income. It is taxed. It is not as if that money goes untaxed.
I don’t think the mortgagor should also pay income tax on the transaction.
>>Mortgage interest paid to the note holder is income. It is taxed. It is not as if that money goes untaxed.<<
You could say the same for car loans, unsecured loans, lines of credit and any loan that makes interest (pretty much all business loans).
No, the interest deduction was there to influence behavior: in this case to buy homes.
The underlying question is: should tax laws influence behavior or fund our government? It is more the former than the latter now.
Me? It would not affect me, since I have a 3.25% Mortgage. I don’t have a dog in this fight and am open to looking at the broader implications.
The borrower isn’t paying income tax on the transaction. The mortgage interest deduction is to allow the borrower to exclude from income tax money that is paid out as mortgage interest.
All other interest payments are with after-tax dollars, except if you borrow money for investment, in which case you can deduct the cost of borrowing from the gains of the investment.
When you buy a loaf of bread, the store pays tax on the profit, but you don’t get to deduct the cost of the bread from your taxes.
We should elimate all income tax deductions and charges for interest. No deductions for mortgage, no payments for interest received.
Of course, then the government couldn’t get favorable borrowing by giving tax exemption for their interest payments.
By your logic, candy bar purchases should also be tax deductable.
The money a quick-mart makes selling a candy bar is taxed.
I don’t think the person buying a candy bar should be taxed on that money also.