Nope - you're still not getting it. The investor will artificially ensure that the investment doesn't make good money - he will maximise his interest and take the state subsidy tax relief.
So where he is making a good profit, he avoids tax by making it look on paper like he is not making a profit, by diverting his capital elsewhere. He is better off keeping it on deposit then repaying his loan, thanks to the tax relief.
Complainer, really, I want to agree with you. I thought as you once. Then I talked to people who knew what they were talking about. I've had second thoughts and want to be convinced but I have to agree with the landlords.
From what I can see you either accept mortgage interest as a legitimate expense or you don't.
If it isn't then how so?
If it is, but you want to disallow it or a percentage of it, for tax purposes then why? Are there other examples of apparently legitimate expenses that
are disallowed for tax purposes that you are aware of?
I do want to be convinced on this but ultimately your tax system has to be fair and transparent.
What you've described is a person who's made an investment that doesn't make him any money on a day to day basis, who never pays for the property that forms the investment, who has paid up front a huge tax bill in stamp duty.
I'm sorry but that's not someone to envy. This person has no income. Their business model is predicated on a false assumption that there is no risk, that property prices only go one way, that they'll always have tenants, that the maintenance costs / management fees don't exist. This isn't 2006. The investor you describe has artificially bankrupted himself.
This is the argument of the newly converted. Those who didn't see the property bubble for what it was, when it was, and now zealously want their pound of flesh for falling for all the bull.