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« Previous Entry | Main | Next Entry » Did U.S. Tax Policy Contribute to the Housing Bubble? Name:
Roger Salzgeber
Question: How much does (did) federal tax policy contribute to the housing bubble? If it was a contributing factor, how should that policy be reformed? -- Posted June 26, 2009 | Comments (1) | Permalink
 TrackBacksListed below are links to blogs that reference this entry: Did U.S. Tax Policy Contribute to the Housing Bubble?. TrackBack URL for this entry: http://www.pbs.org/newshour/mt4/mt-tb.cgi/1429 1 CommentsLeave a comment |
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I understand American home-buyers (and investors) get tax concessions on their mortgage interest costs. This can reinforce rash buying (and borrowing) decisions when other factors like job/income security seem OK ... and thereby inflate market prices. By comparison, Australian buyers DON'T get tax relief on mortgage interest costs for their owner-occupied home - but may for investment properties only.
The Australian home market does suffer a much milder version of the present US problem - also mitigated by still having a net home supply deficit, so that foreclosed homes may be resold (relatively quickly.
It seems the US home-buyer's purchasing ability needs some restraints - like lower minimum lending percentages (of home purchase price) and phasing out the tax deduction on owner-occupied homes.