Cheaper housing scheme disappeared: less interest deduction

Mortgage interest has not been fully deductible for some time now. In 2010, the rules on mortgage interest deduction, but also on other tax rules for housing, will become even stricter and calls for even more measures will be heard. The stricter rules from 1 January 2010 at a glance, including those regarding the mortgage interest deduction.

When is mortgage interest deductible?

In 2010, the interest on a mortgage is only deductible if the loan is used for the purchase, improvement or maintenance of the home. In addition, a maximum period of 30 years applies to the interest deduction. Furthermore, the scheme only applies to the first house.

Surplus value when selling a house: what does the tax authorities say?

Surplus value when selling a home may only be deducted if it is invested in the new home. Anyone who moves to a house in a lower price range must also fully invest the surplus value in the new purchase in order to continue to benefit from the full mortgage deduction.

Cheaper housing scheme disappeared in 2010

In 2009, homeowners could still make use of the cheaper housing scheme. This was part of the additional loan scheme. Under the additional loan scheme, the profit made on the sale of a home had to be invested in the new home. Those who moved to a cheaper home were allowed to use the surplus value for consumption purposes and then retained the full interest deduction. However, in 2010 this is no longer possible.

Example of the interest deduction for mortgages from 2009 and 2010

A couple has a mortgage of 150,000 euros and sells their old house for 250,00 euros. They buy a house in return for 200,000 euros. In 2009, they could use the remaining 50,000 euros for a car or a long trip and also take advantage of the full interest deduction on the mortgage of 150,000 euros. But in 2010 that is no longer possible. In 2010, they are even only entitled to the interest deduction on a mortgage of 100,000 euros. This is the purchase price minus the excess value. If they want the full interest deduction, they must invest the surplus value of 50,000 euros in the new apartment. In that case, they again arrive at the interest deduction of 150,000 euros. (purchase price minus surplus value).

Transitional arrangement for mortgage interest deduction

However, a transitional arrangement applies. If the new home was purchased before October 1, 2009, the cheaper housing scheme will remain in force. This also applies if the old home was only sold after January 1, 2010.

Simplification of additional loan scheme

Abolishing the cheaper housing scheme is part of the simplification of the additional loan scheme. For example, from January 2010 onwards, movers can finance the costs of taking out a new mortgage with interest deduction in the mortgage. The so-called home ownership reserve also no longer applies for five, but only for three years. Anyone who does not immediately buy another house after selling a house will be allocated a home ownership reserve. In the event of a later purchase, the surplus value must be reinvested in the new home.