The maximum mortgage interest deduction will decrease from 46% this year to 43% next year. People with a higher income and an interest-free mortgage of € 400,000 at 2% interest therefore have € 20 less deduction per month. “But there are also many households that have set their interest rates at 4% or more. Then it’s already 40 € less deduction per month, ”says Oscar Noorlag from the advisory group.
In addition, the income tax rate will be reduced from 37.35% to 37.10%. That means a little more net income and a little less deduction. “But that’s manageable,” says Noorlag. “Assuming you pay € 6,000 mortgage interest annually, you will receive € 1 less mortgage interest deduction a month in 2021.”
For people on higher incomes who are planning to move to a lower interest rate, Noorlag said it might be interesting to do so now. This is because you can deduct the penalty interest and financing costs at the cheaper rate of 46%. According to Noorlag, this saves € 600 on a € 20,000 fine.
The deterioration in mortgage interest relief is offset to a small extent by a reduction in the notional rental value. This tax, which is based on a home’s WOZ value, will increase from 0.6% in 2020 to 0.5% in 2021. With a WOZ value of € 300,000 now, according to Noorlag, € 6 per month will be saved.