PROPOSED mortgage interest tax relief will make home buying more attractive in some cases but should not be the sole reason for purchasing, tax experts warn. Rising interest rates and the potential volatility of the property market are equally compelling considerations when deciding between renting or a mortgage. The allowance will permit home-owners to deduct up to $100,000 of the interest they pay on their mortgage from their taxable income each year for up to five years. For those living in housing subsidised by their employers, the case for taking up the allowance is less clear when assessed purely on tax criteria. For example, under the proposed arrangements a two-child family with an annual income of $504,000 buying a $2 million property financed by a $1 million mortgage would, after the deduction of the various new allowances, have annual disposable income of $382,600, according to Deloitte Touche Tohmatsu. The same family receiving a 10 per cent refund of their annual $144,000 rent would, after the deduction of allowances, have a disposable income of $379,368. With falling house prices and rising interest rates a family could be better-off staying out of the property market. Under the scheme, only one person per property can claim the allowance and claimants must be living in the property. Howorth Tax director Deborah Annells said there was confusion about how the allowance would work in practice. Until the detailed legislation appears, tax experts are divided on how married couples buying a property together can claim. Tax advisers said a married couple would not both be able to claim the allowance in the same year so the biggest deductions would be gained from opting for the higher-earning spouse. Once that spouse has made the claim for five years, there is some disagreement about the potential for the other to claim. Price Waterhouse tax partner Alice Chan said: 'Maybe the husband could claim the first five years, and the wife could claim the next five years.' Ms Chan said if the couple divorced and one re-married, the new spouse might even be able to claim a further five years. But Ms Annells believed the Government would close such loopholes. She said: 'I don't think that is the case. The spouses must choose between them. Since the tax allowance applied to a property it could only be claimed once.' For unmarried couples sharing a property, only the named title-holder can make the claim, it appears. Home owners also will have to consider when to apply for the allowance. In most cases, mortgage-payers would want to claim the allowance when they first take out the mortgage and the interest payments are at their highest. Ms Annells said: 'It might be better to wait. If the main breadwinner is out of work or doesn't earn enough to make it to the higher marginal tax bands, the allowance would have less impact.' While the details have yet to be confirmed, the experts agree that it would be up to home-owners to choose which five years they want the allowance. They would not have to choose five consecutive years. For those who have paid off a large part of their mortgage and who no longer make interest payments of more than $100,000 per annum, re-financing the property may be an option. But experts said the figures would need to be examined carefully. Price Waterhouse's Ms Chan said: 'You would need to look at how much interest you would be paying the bank.'