Deductible housing loan instalments?

The instalments paid on housing loans could be deducted from the taxable income of any individual, yet this will not happen any sooner than two years from now and will depend on the possibilities for financing the budgetary deficit without generating inflation, said PSD (Social Democrat Party) Deputy Florin Georgescu, chairman of the Budget-Finance Committee of the Chamber of Deputies and former Finance minister throughout 1992-1996.
“This proposition is now being considered and has potential. It depends on the budgetary constraints related to non-inflationary financing sources, either domestic or foreign, for the budget deficit. However, this is all about taking gradual steps. The first step discussed will be deducting the taxes on homes from the taxable income, then the earthquake insurance premiums and only then the instalments on housing loans. This is the logical order of priorities,” Florin Georgescu says.
Even though most cautiously put, the possibility of having such expenses deducted from taxes shows a possible relaxation of the strict fiscal policy the PSD Government has been enforcing as far as individuals are concerned. Although the global taxation system introduced in 2000 has many deductions of the basic spending (insurance premiums, housing expenses, private pension and additional medical insurance expenses) among its principles, as it is the case in Western Europe or in the United States, these deductions have not been used so far.
The very high inflation imposed tight fiscal deficits (2.66% of GDP this year), so that the Finance Ministry will have more room to manoeuvre only in about two or three years when inflation reaches 5% or 10%.
Even though it may lead to a decline in the global income tax-related budgetary revenues, the deduction of certain expense categories might induce growth in the business of companies offering the products or services in question (banks, construction companies, insurers).
sorin.pislaru@zf.ro