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We knew since 2014 that this was going to happen as since that year the maximum mortgage amount has already fallen by a half a percentage point per year. From 2018 you can not borrow more than 100% of the value of your home. This means that the buyer must fall back on his savings more than before. 'Kosten Koper', NHG and renovation costs can not be co-financed. With this measure, the government wants to prevent people from getting into more debt than they can bear. In itself this is a sensible endeavour, but it will be painful for some people in the wallet.
This tax arrangement relates to new residual debt. As of 2018, it is no longer possible to deduct interest on the residual debt when selling your property. For those who have already sold a property and already use the interest deduction on residual debt, nothing changes. The maximum of 15 years will then remain in force. Therefore, if you are negotiating your purchase of a home, it may be attractive to give it an extra push. On the other hand, do not go crazy, and make sure you account for the realistic sums involved.
Van Bruggen Advisory Group has made an example calculation:
- Suppose that you have a residual debt of € 30,000.
- The interest rate is 3% and you have an average income.
That means you will pay € 3,000 over 15 years.
This measure affects the homeowners who earn more than twice the average. In box 1, the maximum mortgage interest deduction is reduced by half a percent to 49.5%. This is again no surprise. This fourth slice of the income tax in box 1 has to concern itself with this every year. In practice, it is often a small monthly amount but, overall the living expenses become higher each year.
Incidentally, the tax rate for the highest segment is likely to be reduced from 52% to 49.5%.
In the third tax segment you pay a rate of 40.85%. By 2018, this segment will be extended, increasing the upper limit of €67,072 to €68,507. Therefore, over the €1,435 euro difference you pay 40.85% in place of 51.95% next year. This is also a measure which applicable to the higher incomes.
Do these measures seem to affect your choices for next year? Do you need information about your home or about a property that you have in mind? We are happy to assist you.
