Mortgage interest deduction reduced quickly calculation
The mortgage interest deduction is being accelerated. All changes at a glance + calculation of the consequences of a lower interest deduction for homeowners.
Mortgage interest deduction accelerated
The mortgage interest deduction will be accelerated from next year. The maximum interest deduction will then be reduced by 3% annually. In 2023, the interest deduction will then be a maximum of 37.05%. This is 19 years earlier than in the plans of the previous Cabinet.
Reduction in mortgage interest deduction partly compensated
In addition to the lower tax benefit, homeowners will also pay less tax.
The reduction of the mortgage interest deduction is (partly) offset by a reduction in the notional rental value (EWF). This addition to owning a home goes from 0.65% to 0.45% in 2023, according to the schedule below.
We therefore include the notional rental value in our calculation of the consequences of a reduction in the mortgage interest deduction.
Calculation of the consequences of a lower interest deduction for homeowners
We calculate the tax benefit (mortgage interest deduction and EWF) for homeowners with an average income and at 2.5 x average. We therefore assume an annual increase in the WOZ value of 4%. A cautious estimate given the average rise in house prices.
Calculation tax benefit situation 1 (average income)
- Current WOZ value: € 180,000
- Mortgage sum: € 175,000 (interest-only)
- Highest income: € 35,000
- Mortgage interest: 3%
2019: Interest (€ 5,250) – / – EWF (€ 180,000 x 0.65%) x Deduction Rate (38.10%) = € 1,554 tax benefit
2020: Interest (€ 5,250) – / – EWF (€ 187,200 x 0.60%) x Deduction rate (37.80%) = € 1,560 tax benefit
2023: Interest (€ 5,250) – / – EWF (€ 194,688 x 0.45%) x deduction rate (37.05%) = € 1,594 tax benefit
Conclusion: The above calculation shows that the tax benefit for modal incomes will even rise slightly in the coming years. The lower mortgage interest deduction is fully offset by the reduction in the notional rental value.