In our NewsFlash of September 27, 2012 we informed you about a tax bill introducing more strict rules for mortgage interest deduction. If this bill is adopted as of January 1, 2013, the ‘own dwelling’ mortgage loan should be fully redeemed within 360 months, and at least in accordance with an annuity repayment schedule. Otherwise the mortgage interest will not be tax deductible anymore. For mortgage loans that exist on January 1, 2013 the mortgage interest remains tax deductible according the the current rules.
However, if you rent out your own dwelling, or will rent it out in the future, for example during a period of assignment abroad, and this situation ends in 2013 or later, upon return a problem with the mortgage interest deduction may occur. The same applies if you temporarily do not use your own dwelling as main residence in another way. After all, it cannot be excluded that your mortgage loan has to comply to the new rules to continue the mortgage interest deduction.
The above also applies to loans concluded for financing the own dwelling where no mortgage is given.
Regardless whether the above tax bill will enter into force, it is anyhow recommended to discuss the mortgage situation at an early stage with a view to potential limitations of the mortgage interest deduction.
If you have any questions, please feel free to contact LIMES international.
