Divorce and your tax return: what to do about your mortgage?
Divorced couples who own a house together often trip up when filling out their tax return, the Dutch Tax and Customs Administration has said. But what are the tax rules if the property and mortgage are in both names 50:50 and one of the partners moves out? We’ve put together some key points that you should bear in mind.
Claiming your mortgage interest and the two-year limit
If you continue to live in the property and your former partner moves out, you can claim 50% of the total mortgage interest. After all, the property is still your main residence.
If you move out and your former partner stays, then the separation arrangement applies: the partner who moves out may claim for 50% of the total mortgage interest for up to two years (the two-year limit), even though the property is no longer their main residence. These two years start as soon as the partner has moved out of the shared property for good. The mortgage interest must have actually been paid to qualify for tax deduction.
If the partner who moved out has not yet disposed of their ownership share of the property you own together after those two years, then they have to declare their share of the property and their share of the mortgage in box 3 of their tax return.
If the partner who moved out sells their share to the partner staying in the property, then the partner staying will likely need a mortgage to take on this additional share. The interest on this new mortgage is deductible if the mortgage term is no more than 30 years and is repaid as part of an annuity or linear repayment scheme.
Additional tax on taxable income from your main residence
If you own your own property, you must declare the taxable income from your main residence (the ‘eigenwoningforfait’) on your income tax return. This is a percentage of your home’s value, as determined in your municipality’s assessment (known as the WOZ value). Your income tax return for 2024 is based on the WOZ value on the reference date: 1 January 2023.
If the WOZ value of your home was between €75,000 and €1,3100,000 on that date, you will have to pay income tax on 0.35% of this WOZ value for your share of the ownership in box 1 of your 2024 tax return. Once either of the partners moves out of the jointly owned property for good, they will have to pay their share of additional tax on taxable income from the property for up to two years.
What if the partner staying in the property pays rent to the other partner?
As soon as one partner has moved out of the shared property, they essentially give the remaining partner the right to live in the home and use their share of the ownership. If the partner staying in the property starts to pay rent to the partner who moved out to compensate for this, this rent will not be deductible by the partner staying in the property and the partner who moved out will not be taxed for this. The amount of rent paid depends on the facts and circumstances of the shared property.
What if the partner staying in the property doesn’t pay rent to the other partner?
If the partner staying in the property does not pay rent and there is an obligation to pay spousal maintenance, the right to remain in the property provided by the partner who moved out can be considered spousal maintenance. The partner staying must pay income tax on this in box 1 and possibly also a statutory healthcare insurance contribution. For the partner who moved out, the right to remain in the property provided to the partner staying is deductible in box 1. The amount of this spousal maintenance is equal to a proportional part of the additional tax on taxable income from your main residence.
What if one of the partners pays all of the mortgage interest?
Often, one of the partners will be paying the full amount of mortgage interest. In that case, only 50% is deductible as mortgage interest paid. This is because the other half of the mortgage interest was paid in favour of the other partner. Only if one partner is required to pay spousal maintenance can they deduct this part as such. However, you must be able to demonstrate that you are liable to pay spousal maintenance. You can do this through a court order or by laying down maintenance arrangements in a separation agreement.
