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Tax Deductions of a Mortgage Credit

tax deductions

You have recently taken out an installment loan or a mortgage loan, and the relevant question of the tax deductions or benefits you may be entitled to arises.

In Belgium, given the importance of the tax burden, looking into taxation and tax benefits that could reduce your overall taxable income is an essential matter.

First, it is necessary to make a fundamental distinction between loans taken out for private purposes and those, on the contrary, taken out for professional purposes.

Current state of the matter.

Loans for Professional Purposes

In Belgian tax law, an expense can only be considered deductible by the administration if it is intended to facilitate the earning of professional income. Thus, the car a doctor buys to visit patients will only be deductible because it allows him to earn income from his professional activity. Conversely, certain mixed expenses, meaning those that serve both professional and private life, are only partially deductible.

Thus, a loan intended to be essential for earning taxable professional income will be 100% deductible, including interest. Deductibility is generally spread through an annual depreciation percentage. For example, a car can be depreciated over a maximum of five years. This method aims to spread expenses over different fiscal years to distribute the tax effort over several periods.

The Deductibility of Your Mortgage Loan

In the realm of expenses useful for your private life, the only loan that is deductible or provides tax benefits is the loan used for the acquisition of your first home: your mortgage loan.

In short, the tax deduction is carried out as follows: you can deduct the repaid capital as well as the interest and insurance premiums, but the total of these amounts is capped at an annual maximum of €2,120 per person subscribing to the mortgage loan. For the first ten years, this amount is increased by €710, totaling €2,830 per person. If you have at least three children, you can add an amount of €70.

These increases are only valid for the first ten years and only if you own a single residence.

Conditions to be able to deduct your mortgage loan from your taxes:

  • The loan must be for a single house intended to be the family’s main residence;
  • The loan must be secured with a mortgage;
  • The loan term must be at least ten years;
  • The loan must be contracted with a credit company established in the EEA (European Economic Area)
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