A Residential Interest Deduction as a Potential Approach to Taxing Imputed Rent

The non-taxation of homeowners' imputed net rental income is recognized as inequitable and non-neutral, but is often felt to be unavoidable for practical reasons. It may be feasible, however, to tax imputed rental income indirectly if tax deductions were allowed for the residential interest expenses of both tenants and homeowners with the offsetting personal income tax rate adjustments made in a distributionally neutral fashion. That such a provision would improve tax equity is demonstrated with Canadian data. Allowing such deductions in Canada would facilitate homebuying by admitting many more families to the market although homeownership would ultimately become more expensive

Econometrics · Economics · Gross income · Microeconomics · Public economics · State income tax · Tax deduction · Tax reform · Canadian Policy and Governance · Fiscal Policy and Economic Growth · Housing Market and Economics

• Myths and Realities in Mortgage Finance and the Housing Crisis

  Lawrence B Smith•Canadian Public Policy•1976

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