An Idea to Improve Housing Affordability

Recent polls suggest that many renters believe they’ll never own their own home due to lack of affordability. High home prices and interest rates are the main barriers.

We need big ideas and solutions to help prospective homeowners, especially first-time buyers.

Here’s an idea I think could help, however, I’m proposing it only as an example of how we need to think “out-of-the-box” to move the needle.

How about if every first-time home buyer was allowed to choose to claim their mortgage interest payments as a tax deduction (thereby reducing their income tax burden and increasing their after-tax cash flow) in exchange for being obligated to pay capital gains tax in the future, if applicable, on any appreciation in the value of their property upon disposition (thereby reducing their net proceeds)? This is the practice in the U.S. In effect, this would mean paying tax in the future in exchange for a tax break during ownership.

First-time home buyers who are not interested could follow the current practice of not deducting their mortgage interest payments and not paying capital gains on their home’s appreciation.

Seems to me there is no shortage of ideas and possible solutions. In my opinion, there is a shortage of political and societal will and understanding.

Builders and developers are not the cause of our housing crisis. We are forever accusing them of greedily filling their own pockets at society’s expense, so we restrict their ability to deliver housing and society pays the price through lower supply and higher prices. How ironic.

What are your thoughts? I’d love to hear! Leave a comment or connect with me on LinkedIn to join the discussion.

1 Comment (+add yours?)

  1. vaino Einola
    Mar 12, 2023 @ 10:01:52

    Our wants exceed our ability to pay. In the 50’s we built 2 bedroom “srrawberry box ” bungalows and everyone was happy … raised large families… built out the basement with extra “rec rooms” Children were allowed to share bedrooms. Totally unacceptable to-day …. every child has to have a bedroom, every house has to have three bathrooms… It’s time to lower expectations…. let’s re introduce starter homes.


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