Mortgage interest deduction

Mortgage interest deduction regulations have become significantly more complex in recent years. One example is the interest deduction history for mortgages under old law -better known as the fiscal Existing Home Ownership Debt, abbreviated BEWS-, which retains a lifelong impact. For debts under the new law (from 1-1-2013), this is irrelevant; here, the remaining debt and remaining term at a mutation point is important for the future. Note, however, that debts under old law do affect debts under new law. Caution is therefore required.

Moreover, there are situations in which your (new) partner's interest deduction history may affect your ability to deduct interest. So be alert when you move into a new relationship, both for couples living together with and without a cohabitation contract. It is therefore advisable to seek advice beforehand, as this cannot be corrected afterwards. Matrimonial property rights and death can also affect whether interest deduction is transferred to the partner or not.

Early repayment can also have unexpected negative consequences. Upon full repayment of a debt or loan part under old law, the interest deduction is interrupted. For partial repayment, however, the interest deduction history continues to apply to the original amount. The previous advice to hold a small debt due to mortgage interest deduction has been superseded by new legislation over the years.

These are just some "small" issues that can have "big" tax consequences. It is wise to consult a specialist for new housing situations and to map your mortgage history in good time. The earlier you start doing this, the easier it will be. Because in a situation where, for example, the first house was bought before 2001, there have been moves (several times), additional repayments have been made and a relationship break-up has taken place, it is a real challenge to track down all the necessary data and make a correct tax analysis.