Acta academica karviniensia 2022, 22(2):26-36 | DOI: 10.25142/aak.2022.013

USE OF THE TAX MORTGAGE INTEREST DEDUCTION FOR THE PURCHASE OF OWN HOUSING IN THE CZECH REPUBLIC

Pavlína Kirschnerová¹, Jana Janoušková²

¹ Univerzita Tomáše Bati ve Zlíně, Fakulta Managementu a ekonomiky, Mostní 5139, 760 01 Zlín

² Slezská univerzita, Obchodně podnikatelská fakulta, Univerzitní nám. 1934/3,73340 Karviná

The paper, based on primary research and evaluation of data from the Financial Administration of the Czech Republic, evaluates housing support in the form of tax deduction of mortgage interest from the tax base in the Czech Republic. Research has shown that this support undermines horizontal and vertical tax fairness and excludes assistance to taxpayers with incomes below the taxable amount. Housing support is not conceptual and lacks control and feedback mechanisms. However, distributional effects need to be taken into account when considering tax reforms, especially for indebted and cash-strapped households. However, we do not recommend completely canceling the tax deduction, which would limit household budgets and young families' access to their own housing. Younger taxpayers mainly use the tax deduction, and the abolition of the tax deduction would increase housing costs for these taxpayers.

Keywords: individuals, mortgage interest deduction, tax support, tax-housing support.

JEL classification: D14, E62, H2

Received: July 18, 2022; Revised: July 27, 2022; Accepted: November 23, 2022; Published: November 24, 2022  Show citation