After many years of rising house prices and mortgage debt has been taken raised the issue of ränteavdragen or the tax reduction for interest expenses related to housing should be reduced or completely removed. Among other things, the Swedish financial supervisory authority and the Riksbank suggested this. The issue of the removed interest deductions should reasonably also be timely for the skatteöversyn should be done within the framework of the januariavtalet which refers to, among other things, households ‘ indebtedness.
Why do we have interest deductions or tax credit for the interest? How strong is the financial stabilitetsskälen to reduce them? There are other arguments to reduce them? What would the consequences be? What says the research?
the Current design has its foundation in the 90-century tax reform. In connection with the foregoing, it was considered on the basis of a skatteteoretiskt perspective that owned homes would be taxed in the same way as capital income. The principle was the full taxation of capital income and full deductions for interest expenses.
When we deposit money in a savings account we get the interest. The interest rate would be taxed at 30 per cent. In order not to become a distortion in where households place their savings was considered at tax reform to own homes would be subject to a property tax, which would correspond to the tax on the return from other capital assets.
Nedtrappade interest deductibility would contribute to the bostadsprisfall, redistribution of wealth and borrowed capital and equity are not given the same tax conditions.
Households would otherwise choose to save more in real estate than in other assets, which would contribute to a distorted allocation of resources. The tax was also considered justified in the interest of equal taxation of rental housing. Ränteavdragen was set at 30 per cent, after previously varied with the level of the marginal tax. The model ensured an equal tax treatment of borrowed capital and equity.
. One argument was that home owners, unlike other capital assets do not generate any monetary returns that can be used to pay the tax with. Another was that periodically, the runaway housing prices and the tax assessment made the tax is unpredictable.
the Criticism contributed to the tax in 2008 was converted to a municipal real estate fee of 0.75% of the cadastral value with a roof. For 2019, the cap is set to 8 049 sek.
In areas with a high tax value is today, the tax on accommodations is significantly lower than what it would have been with the old property tax. At more normal interest rate levels than today would ränteavdragen in areas with high assessed values to be significantly higher than the municipal real estate fee. In these locations, it should substantially reduce the property tax theoretically have contributed to both higher housing prices and increased bolåneskulder. There is also an empirical study which indicates that the housing prices are not affected at all by the fastighetsskattesänkningen. One reason for this may be that households considered that the taxation of housing would soon be able to come to be raised again and that it in the study was difficult to control for the full impact of the financial crisis.
Theoretical reasons still strong for this. This means that the arguments to reduce the ränteavdragen of financial resiliency is particularly strong. It is households ‘ long-term räntebetalningsförmåga and not the liabilities that reasonably is of the greatest relevance for financial stability.
Are there other arguments to reduce the ränteavdragen? Yes, possibly. The substantially reduced operating nettobeskattningen of owned homes means that the owned dwellings are now fiscally favored in front of the dwellings. In a location where it is likely to be politically difficult to substantially raise the property tax on owned homes would like an option instead ränteavdragen be reduced or takas so that they are at more normal levels of interest rates are in parity with the municipal real estate fee. Speaks against this rent control which in effect provides a subsidy to residents in rental properties in areas where bruksvärdeshyrorna less than marknadshyrorna, which coincides with the areas where the nettobeskattningen of owned homes has been reduced the most.
another argument to reduce the ränteavdragen made by professor Peter Englund is that they are at more normal interest rate levels than in the day gives a low nettobeskattning of owned housing in relation to the capital standing on the ISK.
at the same time have the national institute of economic Research demonstrated that state tax revenues will increase slightly more than the cost of ränteavdragen when interest rates rise.
What impact would a reduction or a removal of the ränteavdragen have? It depends a bit on whether the reform is done in isolation or in a package of compensatory measures. It is still likely that it would have significant price – and substitution effects. It shows the experience from the tax restructuring in the early 90’s, which in hindsight was judged to have contributed to a fall in house prices by 15 per cent.
on the Basis of a research usually use the user-cost-of-housing-calculation is a rule of thumb that housing prices may fall by 1 percent for each percentage point that ränteavdragen be reduced. Absolutely no interest deductions would, therefore, theoretically lead to a bostadsprisfall of 30 percent. In practice, however, depends the effect on how the housing supply change in the long term, and on whether households perceive the change as permanent or not. Given the risk of potentially large price drop should nedtrappade interest deductions anyway take place over a long period of time.
A reduction of ränteavdragen switch financial different for new home buyers, respectively, of the households that already own a home . , Reduced interest deductions makes it somewhat easier for new households to enter the housing market when housing prices fall because the need for down-payment diminish, but it would not reduce their monthly interest expenses. Those who already own a home would rather suffer a förmögenhetsförlust when housing prices fall. Highly leveraged households would be hit harder than lower-leveraged households. A removal of the ränteavdragen would, as professor Mats Persson has pointed out, also greatly disadvantage those who have to finance their accommodation with the borrowed front of the equity.
in Summary, the arguments for reducing the ränteavdragen of financial resiliency is not particularly strong. However, there are certain structural and public-financial arguments that could possibly speak for nedtrappade interest deductions. It would, however, at the same time contribute to the bostadsprisfall, redistribution of wealth and borrowed capital and equity are not given the same tax conditions.
