Good points, thank you! I didn't mean to say that it's inherently bad - I am actually puzzled that here companies (who want to make money) can save at least some taxes on buying a house as an investment, while a private person has no such option. This doesn't seem like a fair market to me, as a company can ALWAYS out-compete a private buyer (assuming both having the same cash reserves).
The flip side might be true, but I think it's not as easy. I have a meeting now, so I can't go into detail (and not think about the details; ergo you might still be 100% right!). But if private buyers - those who would rent - can more easily compete with companies on buying, companies need to make renting more attractive. But maybe that effect is negligible.
it's the same situation where a company gets to pay tax on profits, but a human have to pay tax on revenue (their income).
I want to see this equalized - either allow humans to pay tax on profits only (i.e., they can deduct all expenses of their living), or tax a company's revenue like how a human is taxed.
Re:Why northern Europe is so indebted
by KptMarchewa on Wednesday March 03, 2021 @08:01AM
(#26327750)
That makes no sense. Current tax systems assumes that only people are taxed at the end - taxes such as VAT are in practice paid only by end consumer. Company taxes disincentivizes "taking profits" out of the company by not taxing expenses - wages, investments, costs of doing business. And they should properly exclude personal tax dodges, such as creating fake company to buy house and live in it.
However it also reduces the incentive to reapay mortgage capital at all (is that bad?)
Currently if you have £500k in cash, you can either
1) Buy a house and pay no rent
2) Pay £1500 a month in rent
Why would you pay £1500 a month in rent (which at a marginal rate of 40% means having to earn £3,750 a month, or £45k a year, extra in income.
Effectively you get a 9% roi on that £500k by buying the house (ignoring house price inflation). Someone with £500k in cash and £50k a year is better off than someone with £0 in cash and £90k a year, despite the latter being nearly twice as valuable to the economy.
Now in a situation where £1500 a month is tax free, you'd have to earn £18k extra a year, and that roi on house ownership drops to 3.6%, and that's good. Housing should be somewhere to live, not an investment.
Of course on the flip side, the extra money available would likely push private rents and house prices up anyway. Perhaps the solution would be to ringfence the interest into some form of long term savings (either to use on buying a house, or to fund a pension).