Facts
B.X., residing in D. (SG), owns with his wife A.X. four properties in the private assets in the canton of St. Gallen and four properties in the business assets in the cantons of Thurgau and St. Gallen. He is taxed as a real estate dealer. In the assessment for the state and municipal taxes for the year 2004, the canton of St. Gallen made an object-based separation of the business mortgage interest and separated the private mortgage interest proportionally to the location of the total assets. The canton of Thurgau, in the assessment or objection procedure for the cantonal taxes for the year 2004, based the distribution of the business mortgage interest on an object-based approach, but distributed the private mortgage interest only according to the location of the assets in the private assets.Considerations
The DFC decides that the previous case law on the object-based distribution of mortgage interest for real estate dealers is no longer justified. In order to take into account the economic performance of the taxpayer and to ensure that all mortgage interest can be deducted in the intercantonal relationship, the general quota system of deducting mortgage interest proportionally to the assets must be extended to the totality of the mortgage interest, including those on the business assets of the real estate dealers. To the extent that the share of mortgage interest to be assumed according to…