Deduct debt interests on your personal housing loan from your tax return

Since the 2017 tax reform, two periods have been taken into account:


1 | The period prior to first occupancy by the owner :


Interests expense, financing costs such as the related negociation fee, the costs of the borrowing notarial act and the processing costs of your loan file are fully deductible as acquisition costs. Arrears of life annuities, in so far they constitute purchase costs, shall be treated as interests payable.


Interests expenses in connection with the acquisition of building land are tax deductible only if the construction of the dwelling on that land begins shortly after the land acquisition date. Otherwise, interests expenses may be tax deductible as special expenses.


2 | The period of occupancy of the dwelling by the owner :


Only interests expenses are tax deductible up to a tax ceiling based on the length of your home and the number of people at own charge living in your household :


This tax ceiling is increased by its own amount for each person in the household.


Example :

A couple with their child takes out a loan on the 1st ofJanuary 2020 to finance their home. The interest expense in 2020 amounts to 16,000.00 €. At the time of the conclusion of the loan, a single negotiation fee of 1,500.00 €was paid and the costs of notarial deed of loan and credit file amount to 2,000,00 €. At the completion of the construction on the 1st of July 2020, the couple and their child move into their home.


Tax deductible costs :


  • 1 January 2020 – 31 July 2020 (213 days): 16.000 € x 213/365 + 1.500 € + 2.000 € = 12.836,99 €


  • 1 July 2020 – 31 December 2020 (183 days): 16.000 € x 152/365 = 6.663,01 € which are capped at 3 x 2,000.00 €


  • Total tax deductible costs in 2020: 12.836,99 € + 6.000,00 € = 18.836,99 €.


Source : Tax administration – Interests Expenses related to taxpayer’s personal home.