What tax benefits are there for homeowners?
Owning a home is a wonderful asset, a place where you feel comfortable and can enjoy for much of your life. However, having a beautiful place to call your own also comes with significant costs. Fortunately, you can recover some of these costs through tax benefits. Make sure you don’t miss out on these advantages, and consider seeking help from an experienced professional to maximize the benefits of these deductions.
To help you get started, we’ve outlined the tax deductions and benefits available for homeowners below.
What are the deductions for your own home?
s a homeowner, you are entitled to certain deductions that can reduce the amount of tax you owe. Additionally, in the year you purchase your home, you can deduct some of the costs associated with the purchase from your taxes.
One-time deductible costs:
The costs you can deduct once are those incurred to obtain the mortgage loan. These include:
- Costs for the valuation report
- Notary fees for drafting the mortgage deed
- Mortgage closing fees, which you pay to get the best mortgage deal
- Costs of a structural report, if required for the mortgage
- Costs for a construction or renovation deposit
- Paid construction interest after signing the preliminary purchase agreement
- Costs of applying for the National Mortgage Guarantee (NHG), if applicable
Annually deductible costs:
In addition to one-time deductions, homeowners are entitled to annual deductions, which reduce the amount of tax you owe each year. These are listed below:
- Mortgage interest You can deduct mortgage interest from your taxes for up to 30 years.
For mortgages taken out after 2013, the interest is only deductible if you are actively paying off your mortgage and reducing the principal amount. - Imputed rental value (Eigenwoningforfait) The tax office considers a portion of your home as income, known as the “Eigenwoningforfait.” This is a percentage of your home’s assessed value (WOZ-value), determined by the municipality.
If your home has a WOZ value up to €1,310,000, this is 0.35% (2024). As a homeowner, you must add this amount to your taxable income in box 1. - Remaining mortgage debt If you sell your house with an outstanding mortgage, you can deduct the interest and financing costs on the remaining debt for up to 15 years after the sale. There is no obligation to repay the remaining debt.
- Renovations If you take out a loan for home renovations, you can deduct the interest on that loan for up to six months after the loan is taken out.
- Penalty interest If you pay off your mortgage early or transfer it to another provider, your mortgage lender may impose a penalty. This penalty interest can be deducted from your taxable income in box 1. Other costs associated with transferring the mortgage are also tax-deductible.
- Leasehold The payments you make to buy off a leasehold can also be deducted. The interest on a loan taken out to pay off the leasehold is deductible as well.
- Renting out a property If you own a second property or have not yet sold your previous home, you can rent it out, and these rental incomes do not need to be reported to the tax authorities. If you cannot sell or rent out your previous home, you may deduct the mortgage interest from your taxes for the year you leave the house and the three following years.
Non-deductible expenses:
There are certain expenses that, although necessary, are not tax-deductible. Make sure not to include the following in your tax return:
- Real estate agent fees
- Transfer taxes and VAT
- Notary fees and land registry fees for the purchase deed
- Maintenance and renovation costs (except in certain cases for listed properties)
- Mortgage repayment
- Interest and costs not related to the repayment of the mortgage
- Costs for issuing a bank guarantee
Experienced and Involved Advisors
It’s important to find an experienced and involved professional, such as a good bookkeeping firm or reliable accountant.
They can help you maximize your tax benefits after purchasing your home. And if you’re just starting this exciting home-buying journey, make sure to find a good, trustworthy mortgage advisor, as they are crucial throughout the process.
Nobel Mortgages
This is where Nobel Mortgages comes in! We’re happy to assist you by providing high-quality financial advice and thinking along with you on all fronts. We always go the extra mile for our (potential) clients, truly analyze all possibilities and, when necessary, always think outside the box. In this way, we ensure that we can achieve what others cannot. In other words, we are fully dedicated to helping you obtain the best mortgage or loan that suits you perfectly and, of course, aligns completely with your situation and preferences. Do you want an advisor who looks beyond the conventional and analyzes all the possibilities for you? Contact our experienced and enthusiastic team quickly. Then contact our experienced and enthusiastic team soon. We are available to you 24 hours a day with the utmost commitment and sincere attention. An e-mail is a snap to info@nobelhypotheken.nl or call or app to 06-54770122.
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