FROM LINKEDIN ANSWERS:

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RE: Tax deductions against home loans (mortgage)
From:Lubna Kably
Senior Manager at Ernst & Young
International tax consultant and newspaper columnist
India
RE: Tax deductions against home loans (mortgage)

In India there is a tax deduction available against home loans up to a certain limit. Interest payments above this do not get the tax relief.

In US, there is move to introduce a legislation to remove the mortgage interest deduction on huge houses (more than 3,000 sq feet). This of course stems from the fact that large houses lead to higher energy consumption and gas emissions and this tax policy is seen as a “green policy”.

What is your view on tax sops against housing loans.

1) Should there be a ceiling limit against the interest payable
2) Should there be a ceiling limit in terms of square meters of property
3) Should the entire interest payment be allowed tax free?

I also have an additional question for LI members from the US. Am I right in assuming that at present the entire interest payment is tax deductible?

Thanks in advance. Your comments will help me in writing my next newspaper column.

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On 9/1/07 11:41 AM, John Reinke wrote:
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Taxes are nothing more than theft! How the gang calculates it and asking opinions about the that theft are akin to a mugger asking you if you want to be hit with a pipe or a bat. That being said, unless one is willing to resist, you have to go along with the gag!

You should NOT assume that mortgage interest is ALWAYS deductible in the US. Two things jump to mind: Alternative Minimum Tax where deductions phase out AND refinancing situation where deductibility is limited. Also, in 2008, we’re going to the polls to elect a President. Only one of the candidates Ron Paul can be seen as pro-freedom.

In doing any financial planning, I’d suggest an team approach is needed — lawyer, accountant, and financial investment adviser. They should be three separate people because you need diversity of viewpoints. (I’ve seen some conflicts of interest when you accountant sells investments or the lawyer does accounting.)

Count your change and use your fingers. Where money is concerned, strange things happen.

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RESPONSE:

Hi John

Thanks so much for your reply and interesting insights.

Have a great weekend.

Best
Lubna

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Reinke replied:

Well, I’ll assume “interesting” is a polite way of saying “what a nut job”. :-) Thanks OK. I’ve been called much worse to my face. But as a firm believer in the non-aggression principle of the libertarian movement (i.e., I foreswear the first use of force to attain my goals. To be free, I grant to all the liberties I wish to have myself.), I think you should be free to think whatever you like. When you do write that article, please send me a like. I’ll put it on my blog. I can only guaranty you one extra reader, but you might be surprised how many people read my blog. (I average about 150 per day.) I guess there are a lot of visitor who wants to see a raving loon. :-) Best wishes.

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Lubna Kably wrote:

Hi John

Will def send you the link. This will be published end Sept. What is your email id?

And no, it was not a “nutty answer”. The bit about AMT is interesting. In India, fortunately, Minimum Alternative Tax, which works on the same basis is applicable only to corporate entities and not individuals – fortunately.

Thanks
Lubna

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Reinke replied:

Here’s that email address: XXXXXXXXXXXXXXXXXXXX

Hey, you all are lucky not to have an individual AMT. One of the tax resister’s popular arguments here is that in order for the Income Tax to be Constitutional that it only applies to “corporate entities”, not “sovereign individuals”. It’s hard to say which sets off people more: the income tax or the property taxes. The politicians do a fine job of “sticking it” to us. The really funny thing is that the biggest most-damaging tax is the largely unrecognized “inflation tax”. People are stupid. The politicians, abetted by the big media and the gooferment skoolz, “tax” every dollar by the unrestricted creation of more dollars. And, people just don’t understand it. That’s the sad part. And, it’s a “global tax”. That is the yearly monetary inflation impacts everyone who holds a dollar; not just the people in the US. Amazing how people don’t get it.

L8R,
fjohn

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