Tax breaks for home-owners

Mortgage interest deductions and a bigger tax break

Tax breaks for homeowners

If you own your own home, you can take advantage of a tax break by deducting mortgage interest from your taxable income, for instance. You can often deduct the costs associated with the purchase of your home from your taxable income in Box 1 on the tax return. on to find out more.

 

Mortgage interest deductions explained

Under certain conditions, you can deduct the mortgage interest you pay on your mortgage from your taxable income in Box 1 on the tax return. You will get money back from the Tax and Customs Administration, effectively reducing your net mortgage costs.

Costs you are allowed to deduct once only

  • Certain costs involved in taking out a mortgage
  • Interest on mortgage or loan (subject to conditions)
  • Please note that maintenance costs for a listed building are no longer deductible

 Check the tax authorities’ website  for an overview of the costs that you can deduct.

 

Mortgage interest deduction: terms and conditions

Check whether you meet the terms and conditions. For example: 

  • You are only using the mortgage to buy, improve or maintain your home, or to buy out a ground lease for example. 
  • The home is your main place of residence. You cannot deduct interest for the purchase of a holiday home or second home. 
  • You will repay your mortgage within 30 years and your mortgage is annuity-based or linear. If you took out your mortgage before 2013, you can often also deduct the mortgage interest if you are not making repayments or are only making partial repayments. 
  • If you sell your home and have surplus value and you buy a new home within 3 years, you can only deduct mortgage interest from your taxable income if you use the surplus value for your new home. This is known as the additional loan scheme (‘bijleenregeling’). 
  • Part of the value of your home counts as income in Box 1 of the tax return. This is known as the imputed rental value (‘eigenwoningforfait’) and amounts to a percentage of your home’s value in the previous year (that’s to say the municipal assessment of what your home is worth, 'WOZ-waarde' in Dutch). The WOZ-waarde is set every year by your local council.

Listed building maintenance subsidy scheme

From 1 January 2019, the costs for maintenance of a listed building (‘rijksmonument’) are no longer deductible from income tax. You can make use of a subsidy scheme instead.

How much is the tax refund on the mortgage interest deduction?

You will only receive a tax reduction if the deductible financing interest and fees exceed the amount added to your income for the imputed rental value of your home. If your taxable income in 2021 exceeds €68,507 (€69,398 in 2022), it’s important to note that you can offset the deductible mortgage interest at a maximum rate of 43% in 2021, while this will be max. 40% in 2022.

How do you get this tax reduction?

The deductible interest reduces your taxable income, which means that you may be entitled to a tax reduction. You can get the entire amount back in a lump sum after the end of the financial year once you have completed your tax return for that year. If you opted for a provisional tax assessment you will receive part of the amount each month. After the end of the financial year, the Tax and Customs Administration will determine whether you have received too much or too little and settle the difference with you.

Where can you find the mortgage information for your tax return?

Your Annual Statement also includes your Annual Mortgage Statement, showing how much you have paid in mortgage interest, along with any repayments you made. It also shows your outstanding mortgage amount as at the beginning and end of the year. You can use this information to check the details the Tax and Customs Administration has entered on your tax return in advance.

Your Annual Statement for 2021 will be available from 15 February 2022. You can download this in Internet Banking or via the ABN AMRO app.

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