Also this isn't really that great since lower interest means higher home prices. I'd rather have high interest and low home prices if I were a buyer and try to pay if off ASAP or refinance to lower interest when the rate drops. Buy when interest is high and home prices low and sell when interest is low and home prices is high.
A typical home can sell for DKK 4M. With a 20 year 0% interest and 80% of the 4M mortgaged (the maximum allowed), the "contribution fee" would be set at 0,75%.
That would amount to interests (0%) and "contribution fee" (0.75%) yearly around DKK 24000 (1st year) of which 25% = DKK 6000 will be deductible.
To put that into perspective:
A. An average "medium level" worker will have an average income of DKK 466,660/year[1] and pay DKK 159,212 in taxes, leaving a post-taxes income of DKK 307,448.
B. An unemployed will receive DKK 225,894/year and pay DKK 58,952 in taxes, leaving a post-taxes income of DKK 166.942
So in reality the mortgage tax deduction does not amount to much. With those low interest rates it is around DKK 6000 or DKK 500/month for a typical family.
Compare DKK 6000/year or DKK 500/month to: - a pair of Levi's: DKK 660 - a 4G/5G plan with 50GB/month: DKK 160/month - iPhone 12: DKK 7000
[1] https://www.dst.dk/en/Statistik/emner/arbejde-indkomst-og-fo...
That is the based on the "official estimated value", however, which is typically conservative and lagging and therefore somewhat less (like e.g. 60%) of what the property actually sells for.
The 3M is set so that the vast majority of homes will not exceed this value.
In addition to that we pay a "lot tax" which varies by municipality between 1.6% -3.4% of the value of the lot without the buildings.
Those with more expensive housing benefit more from the credit. Non-homeowners do not benefit at all, and renters tend to be poorer than homeowners.
The mortgage interest deduction serves to put the purchasers of owner-occupied real estate onto a more equal footing with commercially-rented real estate. That seems like a valid public policy purpose, even though the mortgage interested deduction became substantially less valuable with TCJA-2017.
Before I bought the apartment, however, I paid more than that in rent. And all that was money going to someone else. If anyone deserves a tax break, it's those not privileged enough to yet own their own home.
Edit: sorry, in my language "rente" is "interest", so I mixed them up and meant to say I get to deduct the interest part of my mortgage payment in my previous post. Probably where the confusion stems from.
Not anymore. The rise in the standard deduction combined with caps on SALT deductions has drastically curbed the value of mortgage tax deductions. As a result, the number of people in the bottom 90% of income who itemize their taxes has fallen precipitously.
https://taxfoundation.org/standard-deduction-itemized-deduct...
This is a good thing, because SALT and mortgage interest deductions were horrible, regressive policies.