Seldom do we hear any substantial discussion of Canada in the US media, but today on the Morning Joe talk show on MSNBC an interesting perspective was provided on one of the reasons the Canadian Economy is doing better than the US economy. Canadians have often envied the American tax system that allows homeowners to deduct mortgage interest from their taxable income. But in a panel discussion this morning, Canadian-born advertising and investment tycoon Miles Nadal pointed out that deducting mortgage interest is a disincentive to pay off the household mortgage. For that reason Americans were especially hard hit when the bottom fell out of the housing market. Nadal pointed out that Canadians tend to pay down their mortgages more quickly than Americans because of the US tax break. As a result the average American had 38% equity in their home last year while the average Canadian had 48% equity. More telling, in Canada we have only three percent of homes ‘under water‘(negative equity) whereas in the US the number of negative-equity homes is almost 24%.
Leave a Reply