In Australia, if you have a mortgage on the house you live in the interest and other expenses are not tax deductible, unless you rent out one or some of the rooms or run a business from your home, in which case only a portion of the interest and other expenses will be tax deductible. Similarly you don't pay any capital gains tax on selling the home if it is your primary place of residence and you have not earned any income from it.
What are the reasons (tax and legal) for interest being tax deductible on a house you live in in the USA without the house earning you any income? And similarly why is capital gains tax payable on the sale of such a property in the USA?
I have always wondered why this is the case in the USA, because in Australia the tax laws state that unless an asset produces an income, you cannot claim a tax deduction on the interest and expenses incurred in maintaining that asset. Also, our primary place of residence is exempt from any capital gains tax on the sale of the home.