A return to MIRAS - what do you think?

carolt

Recent discussion on a thread I had posted with something entirely different in mind seemed to focus on the tax issue - the disparity between those buying property as an investment, who pay no tax on mortgage interest, as it is treated as a business expense, whilst those (like FTBs), competing to buy the same property, have to pay their mortgage interest out of taxed income.

Some felt this was justified, as to remove the tax privileges from property investors would single them out from other businesses, who pay no tax on necessary business expenses. But surely EVERYONE who buys a house buys it in one sense as an investment, and therefore I wondered what others thought about reintroducing MIRAS in an attempt to level the playing field?

Or any thoughts.

Thanks.

Cleaver

No

To my shame I don't really know what MIRAS is. Am off for a Google, then I'll vote...

Pobby

Interesting point Carol. I enjoyed MIRAS but understood why it was scrapped. However I do take your point on board.

Kohoutek

carolt wrote: »

Some felt this was justified, as to remove the tax privileges from property investors would single them out from other businesses, who pay no tax on necessary business expenses.

The difference between the situation for property investors and entrepreneurs is that businesses create jobs and BTL landlords don't. Thus I don't see why the tax privileges for property investors (unless they are involved in construction, which obviously creates jobs) are justified. Why should the rest of society subsidise people who want to enrich themselves, unless they will create jobs in the process?

1984ReturnsForReal_2

Cleaver wrote: »

To my shame I don't really know what MIRAS is. Am off for a Google, then I'll vote...

Fill us in when you find out...

carolt

MY OH, who asked me what I was typing, disapproves as he thinks it would just ramp property prices further, and that the last thing we need to do is put more of taxpayers' money into propping up the housing market.

Which is a damn fine point. Wish I'd thought of it.

Cleaver

No

Mortgage Interest Relief at Source, or MIRAS, was a scheme introduced in the United Kingdom by Chancellor of the Exchequer Roy Jenkins in 1969 [1] in a bid to encourage home ownership; it allowed borrowers tax relief for interest payments on their mortgage.
In the 1983 Budget Geoffrey Howe raised the tax allowance from £25,000 to £30,000; couples with joint mortgages could pool their allowances to £60,000 and this remained unchanged until in the 1988 Budget, when Chancellor of the Exchequer Nigel Lawson ended the option to pool allowances (a provision that had been known as Multiple Mortgage Tax Relief) from August 1988, a decision he later publicly expressed regret at not having implemented with effect from the time of the budget, as it is generally accepted that the rush to beat the deadline from the time of the Budget up until it was ended, fueled a sharp increase in house prices.[2]
MIRAS was completely abolished in April 2000 by then Chancellor of the Exchequer (now Prime Minister) Gordon Brown who argued it had become a Middle Class perk.
Receiving MIRAS was one of the justifications given by mortgage advisers when selling endowment mortgages.I][URL="http://en.wikipedia.org/wiki/Wikipedia:Citation_needed"]citation needed[/URL][/I
With house prices slumping and the British economy going into recession, there are manyI][URL="http://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_words"]who?[/URL][/I arguing for the return of some kind of similar scheme to help those in negative equity and encourage a revival in the housing market.

For any other ignorant people like me, please see the above from WIKI. It was abolished in 2000 when my main priorities in life were beer, women and excuses as why I hadn't finished an essay, so that's my excuse.

Sorry for being thick, but this meant people could claim tax relief on the first £30k or so of their mortgage interest?

carolt

MIRAS = Mortgage interest relief at source that was paid to everyone with a mortgage until? - late 90's I think? Not sure of exact date it was scrapped.

Gosh - am I showing my age here?!

Cleaver

No

carolt wrote: »

MY OH, who asked me what I was typing, disapproves as he thinks it would just ramp property prices further, and that the last thing we need to do is put more of taxpayers' money into propping up the housing market.

I was going to say the same thing. If they introduced this wouldn't there be a queue for houses like the Next boxing day sale? Prices would rocket.

carolt

Cleaver wrote: »

For any other ignorant people like me, please see the above from WIKI. It was abolished in 2000 when my main priorities in life were beer, women and excuses as why I hadn't finished an essay, so that's my excuse.

Sorry for being thick, but this meant people could claim tax relief on the first £30k or so of their mortgage interest?

In those days not many mortgages were above 30K, don't forget...

Cleaver

No

1984ReturnsForReal wrote: »

Fill us in when you find out...

I will do no such thing. I'm a happily married man. Post reported.