The experiment has already been done in the UK. House buyers stopped being able to get a tax deduction on their mortgage interest in 2000 [1], people still buy houses today.
The problem in the UK is that companies can still deduct the mortgage interest, this puts people who buy property to rent out at an advantage.
> The problem in the UK is that companies can still deduct the mortgage interest, this puts people who buy property to rent out at an advantage.
Not just companies in the usually-understood sense; private landlords can deduct mortgage interest on the property they let as an expense to reduce their tax bill. No need to set up a company or actually declare yourself as self-employed or whatever. (Conceptually they are running a business, but there's no need for a company.)
People who buy property to rent out also have to pay tax on the rental income. It's just like any other business. You pay tax on your profit (revenue less costs). In this case interest just happens to be one of the costs.
I'm not sure what you mean when you say these people have an 'advantage'?
> I'm not sure what you mean when you say these people have an 'advantage'?
People who buy-to-let are not in the rental-income business, they are in the business of acquiring property, because property prices are sky rocketing.
People with a job trying to get on the property ladder pay mortgage interest with wages. People with second, third etc. properties deduct mortgage interest as an expense.
The problem in the UK is that companies can still deduct the mortgage interest, this puts people who buy property to rent out at an advantage.
[1] https://en.wikipedia.org/wiki/Mortgage_interest_relief_at_so...