Henk Jansen

One of the most important reasons for people to buy a house in the Netherlands is the deductibility of the mortgage interest. It is, in fact, the third most important reason – after flexibility in location and the accrual of… read more >

The Future of the Mortgage Interest DeductionOne of the most important reasons for people to buy a house in the Netherlands is the deductibility of the mortgage interest. It is, in fact, the third most important reason – after flexibility in location and the accrual of wealth. What Is the Reason for this Deductibility? At the start of the 20th century, the Dutch government wanted to promote the private ownership of homes. So they decided to encourage it by making the related mortgage interest deductible. A lot has changed since, particularly towards the end of the former century. Currently, the mortgage interest is only deductible if: - the loan is used for the purpose of buying a house, for the purchase-related expenses, and/or for reconstruction of the house - if the home is the principal residence - the mortgage is taken out for a maximum of 30 years - the excess value of a previous (own) home is invested in the house as well. What Will the Future Bring Us? The Netherlands is the only country in the EU that still allows this deduction. This measure costs the Dutch government more than 11 billion Euros a year. On the other hand, home ownership (and the purchase and sale of real estate) also brings the government a lot of money, generated by measures such as transfer tax, home ownership tax, and VAT on newly constructed homes and reconstruction – amounting to a total of almost 10 billion Euros a year. Yet, since the end of the former century, there has been plenty of speculation on the complete abolishment of the deductibility of the mortgage interest. Approximately 60% of the homes in the Netherlands are in private hands. As the consequences of this measure would therefore be considerable, this is not a topic that any government has dared… read more >