Tue, 29 May 2012
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Expert Henk Jansen from Expat Mortgages explains the past, present and future of Dutch mortgage interest reduction.
'In the beginning of the 20th century, the Dutch government wanted to promote home-ownership. Therefore, it was decided to make the interest tax deductible.'
Nonsense. Pure unadulterated crap.
In 1893 the Dutch government wanted to replace old taxation forms with the then absolutely new Income Tax. Income included rent received. Living in one's own property was considered a saving, thus (taxable income).
As a compensation the property owner would be allowed to report cost of maintaining the property as negative income. Amongst these cost the rent paid on a mortgage.
It lasted a full 100 years before any problems arose. The reason being that a) mortgages were basically never more than 70% of execution value of the property and mortgages were paid of in 30 years thus reducing the tax reduction annually.
Things went wrong when those simple limitations were put aside.
'In the beginning of the 20th century, the Dutch government wanted to promote home-ownership. Therefore, it was decided to make the interest tax deductible.'
Nonsense. Pure unadulterated crap.
In 1893 the Dutch government wanted to replace old taxation forms with the then absolutely new Income Tax. Income included rent received. Living in one's own property was considered a saving, thus (taxable income).
As a compensation the property owner would be allowed to report cost of maintaining the property as negative income. Amongst these cost the rent paid on a mortgage.
It lasted a full 100 years before any problems arose. The reason being that a) mortgages were basically never more than 70% of execution value of the property and mortgages were paid of in 30 years thus reducing the tax reduction annually.
Things went wrong when those simple limitations were put aside.
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