The generous Dutch mortgage tax relief system is distoring the housing market, according to a new International Monetary Fund report on the Dutch economy.
The IMF says the government should phase out the tax break, which allows home owners to deduct the full cost of their mortgages from tax.
The measure also means Dutch banks are shouldering too high risks, the IMF said. This is because the large amount of tax relief encourages people to spend more on a home than they can afford.
The government is committed to leaving mortgage tax relief unchanged.
IMF report on Dutch economy
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