Tax Subsidies For Housing: An Ongoing Debate
Subsidies are provided by government as a form of assistance to a certain industry. This means that tax subsidies for housing are a form of assistance to the real estate industry in order for it to thrive. The industry badly needs it today. This is due to the continued fall of property values. The number of foreclosed homes is still on the rise and more and more homeowners are becoming upside down with their mortgage.
Tax subsidies for housing have been a friend to many homeowners. However, many also find this unfair, as a great percentage of taxpayers’ money goes to the housing industry when the money can go to other forms of investments. With the economy shaking, many feel that the tax subsidy on housing should be put on hold. The argument for this is never ending because many homeowners will be affected once it stops.
How tax subsidies help?
Many dream of owning a home but not everyone can afford it. Those who belong in low-income level will not be able to qualify for mortgage loan on their own. This is where the government comes in. The government backs the mortgage loan application of the said individuals through subsidies. There are several programs by different government housing agencies that provide aid to various groups of homebuyers to make properties more affordable.
Tax provisions favoring housing:
When you check the tax provisions, you will find a multitude of accounts supporting this. You find several deductibles in favor of the housing industry. The mortgage interest is deductible. There are also set of deductible items for local real estate taxes. Another is the exclusion of the capital gains. These tax benefits are all part of the scheme to encourage homeownership.
With such provisions, the government is losing a lot of money. Collectively, the deductibles could sum up to a great amount, which the government can use in other forms of investment or projects.
What many argue is that other forms of investment are not getting the same aid from tax subsidies. There are no similar provisions for investing in stocks and bonds. These forms of investments are just as promising. Many experts theorize that such extensive subsidy for the housing investment is among the reasons why the real estate industry is in its current shape. Almost everyone is given to the chance to purchase a house, even though the property may not be affordable base on the income these individuals earn.
Should tax subsidies for housing stop?
Again, many will be affected when this is removed, especially in times like this. It benefits a lot of homeowners as well as individuals who want to own a home through the different government programs. The best thing to do is to study the tax provisions carefully and recommend better provisions that will also favor other forms of investments.
Tax subsidy for housing has definitely helped many homeowners. Thanks to the many government backed programs and tax …