Tax plan: in 2014 0.5% less maximum mortgage interest deduction
As of 2013 there is only a deduction for mortgages with a complete repayment schedule and interest deduction on the remaining debt is 10 years.
Below are the most important change in regard to the mortgage interest deduction in the tax plan.
Mortgage interest deduction only for loans with a complete repayment schedule
Starting on the 1st of January 2013 the mortgage interest deduction only applies for loans with at the least a annuity repayment schedule, in which the loan is completely repaid in, at the most, 360 months. For some debts public disclosure applies. The existing loans will be honoured however. For people that had an own residence and an own house debt and some specific cases the mortgage interest remains deductible even if the relevant loan is not being repaid. This also applies when they refinance this loan in or after 2013.
Decrease maximum tax deduction 0.5% a year, deduction in 2014 is 51.5%.
Starting in 2014 the rate against which the deductible costs in regard to the own residence can be deducted in the fourth tax bracket are lowered with 0.5% each year until the deduction rate is 38%. The tariff will however not be lowered under the rate of the third tax bracket. In 2014 the rate for the deductible costs in regard to the own residence are therefore 51.5% in 2014 in so much as the deduction would take place against the rate of the fourth bracket.
Arrangement for moving mortgage interest deduction, three years after 2014 back to two years mortgage interest deduction.
The maximum period for maintaining the mortgage interest deduction in relation to the house for sale. That period applies until 2014. This means that if the house has been put up for sale in 2011, for that house you are still entitled to mortgage interest deduction in 2014. After 2014 the maximum period is again set to two years. For houses that have been put up for sale in 2012 or later, the period of two years after the end of the year in which the house has been put up for sale. For houses that has been put up for sale , the interest deduction applies until (at the latest) 2016. The maximum term for obtaining mortgage interest deduction for the still vacant future house (for example a residence under construction) is also three years. This also applies up to the tax year 2014. This means that for a house that has been bought in 2011 as an own residence or was under construction in 2011 and that the person obligated to pay taxes will only start using in 2014, the mortgage interest deduction also applies in 2014. For houses that were bought in 2012 or later or of which the construction has started in 2012 or later, also applies a period of two years after the end of the year in which the residence has been purchased.
Deduction interest financing remaining debt: 10 years interest deduction, sold before the 31st of December 2017
Starting on the 29th of October 2012 you can also receive deduction for interest that you pay over a debt that you have as a consequence of a remaining debt that has been created in the period of the 29th of October 2012 until the 31st of December 2017. A remaining debt is created if, at the time of the sale, the selling price of the residence is lower than the own residence debt of that house. You can also be entitled to this deduction if after the sale of your own house, you no longer have a own residence (for example because you have switched to renting a house) . The deduction applies for a period of a maximum of 10 years after the moment the remaining debt has been created.