America House Buyin Tax Savings Scheme

Joey122

I m not sure whether people are aware of this....

But in America your mortageg paymets are payable with pre tax dollars

This means you save a fortuneif you ay a motgage as opposed to rent

Has anyone heard of this before?

noyk

nope, are you sure its not mortgage interest relief like we had in the uk until 89/90 (i think, i'm too young to remember it).

Ian_W

MIRAS [Mortgage Interest Relief At Source] applied in the UK but was gradually whittled away by both parties [restricted to basic rate then to first £30k etc] throughout the 80's and 90's before being put to the sword by GB, I think around 2000.

Not much chance of it being reintroduced here as none of the major parties support it. Always seemed wrong to me that you pay tax on interest earned from savings but don't get any relief on interest paid for loans - especially for important things like housing. Used to travel to the IOM on business up to a few years ago and they were still getting tax relief on mortgages and car loans.

Interesting but academic, IMHO.

Mrs_pbradley936

I am not too young to remember MIRAS - you could claim your interest back up to £30K but most houses did not cost anything like that in the 70s so in effect you got it on the whole amount. We bought our first house in 1975 for £10,500 and moved in 1980 this time the house was £26K.

noyk

pbradley thanks, when did it finish? Was it late 80's or 90's? I thought former but Ian thought later.

dunstonh

There was double MIRAS available for a while too giving upto £60k borrowing with tax relief.

MIRAS was one of the things that used to make endowment mortgages cheaper over the term than repayment mortgages. Very often the real reason people chose endowment (and not the current, hindsight adjusted in view of hope of compensation reason used).

MIRAS was introduced in 1983 and fully abolished in April 2000. The changes to gradually reduce the impact began in 1988 with double MIRAS abolished. The rate was lowered in the 90s.

The other tax relief that helped endowment mortgages (LAPR) was abolished in 1984 but those that took out plans before that date still get it until maturity or surrender.

ManAtHome

Ah yes, the Lawson 1988 budget - I'm limiting relief to 30k per house.... in 3 months time (let the scramble begin...).

Was it double relief or multi-relief (30k per person) - I remember this was when the "buy with your mates" adverts started, can't remember if you could get (eg) £120k if 4 of you clubbed together.

BobProperty

IIRC in the US you were allowed to claim all your mortgage interest against tax until Ronnie Reagan cut it back to only something like $450,000 on your first 2 properties.