New Zealand only recently passed a law that will phase out rental interest deductions over 4 years

https://www.ird.govt.nz/pages/campaigns/interest-limitation-...

I think Japan and the Netherlands have something similar.

It’s fairly limited in Japan at least, but it does a lot to offset property taxes.

Americans used to be able to deduct interest from their credit card bills until the mid-80s.

It's not uncommon in Europe, with the clause that it's a home you live in.

This is very common. We have it in Norway too. It started in 1882. At that time, it was mainly farmers who had mortgages, so the idea was to encourage productivity, making it less costly for them to buy new land for cultivation (You might wonder, wouldn't this just drive up land prices? I wonder, too.)

But once you have them, they're hard to get rid of. When they were in charge for 40+ years, Labour defended them because they wanted to push for homeownership so working people didn't have to live at the mercy of landlords. In the 80s I believe they considered changing it, but then the Conservatives (who of course benefit disproportionately from the deduction) were in a position to block it. These days there is an interest deduction on ALL loans, not just mortgages. Why and how that happened I have no idea.