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Should the government do away with Tax relief on Mortgage Interest?

By Andy Shaw | January 23, 2010

Originally posted 22nd June 2007

Hi,

There was an article in The Times the other day that went on about one of the possible solutions to rising house prices was for the government to take the tax relief away on buy to let properties.

The article went on to say how unfair it was that buy to let investors had an advantage over first time buyers. It amazes me that people look at things in such an unbalanced way.

First off the buy to let investor isn’t necessarily the first time buyer nemesis, at times yes but across the market as a whole definitely not as the BTL investor takes up still such a small percentage of the market. Then it assumed that the BTL investor was taking away from society instead of adding to it.

There was a comment by a man from Dorking who said he was at a housing aid centre in the 1970’s when he saw the problems caused by a lack of rented accommodation. People with good jobs were effectively made homeless because there was then no rented property available.

The reason BTL was originally brought about was that there was a shortage of rented accommodation and the BTL investor provides an essential service that the government does not want and almost certainly is not able to provide.

They also are forgetting that this is not a game to the BTL investor, they are in this for the business opportunity and any other business that borrows to fund its equipment can deduct interest from its taxable income, so I think it would be pretty difficult to bring this in, even if the government would want to.

Best Wishes

Andy

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