Rules for home mortgage tax relief adjusted in 2014

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Mortgage advice

Recent data - for example a modest rise in home  sales - suggests the severe pressure that the Dutch housing market has been under since 2008 is starting to lift. To nurture budding recovery, the Dutch government has introduced measures that may be relevant to consumers – notably a change in the rules for home mortgage tax relief.

Under the new rules, home owners can still deduct part or all of the mortgage interest they pay from their taxable income, provided they pay back the loan in full and at least on an annuity basis within 30 years. Moreover, the rules only apply to new mortgages.

Less tax relief in fourth tax bracket

Home owners eligible for maximum home mortgage tax relief in the fourth bracket (52 per cent) will see the tax rate at which they may deduct their mortgage interest gradually decline. In 2014 this rate will drop from 52 to 51.5 per cent, and in each following year by another half a percentage point, until it has reached 38 per cent. For home owners with a mortgage dating from before 1 January 2013, however, nothing will change.

Mortgage refinancing

The old rules remain in force for home owners who refinance a mortgage dating from before 1 January 2013 without increasing the principal amount. Home owners who raise the principal to buy a new home can still deduct the interest on the additional mortgage sum, provided certain conditions are met. They must repay the entire extra amount within thirty years and at least on an annuity basis. For those who temporarily own two homes, there will still be limited scope in 2014 for deducting interest related to the old home as well as the new one. 

Grace period

Home owners who put their house up for sale in 2012 or 2013 and have in the meantime bought a new home,  enjoy a two-year grace period in which they can deduct all their mortgage interest payments. If the house was put up for sale in 2011, the  grace period is three years. This means it is still possible for these home owners to deduct mortgage interest on two homes in 2014.

Further information in English is available on the website of the Dutch Tax Authorities.


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