Tax advantage for ordinary interests for the home

Tax advantage for ordinary interests for the home

Suppose you own other property (apartment, land, or shop, etc.) next to your own family house. That other real estate should be indicated in the OJ. You will be taxed at your progressive rate at the progressive rate. How can you get rid of it?

Lending for the decoration of home

In the past, you could do the following: decorate your own home and go for a non-mortgage loan (no need to be 10 years old) to decorate your own home (a new kitchen, porch, etc.). The interest of such loan for your own home could be indicated under code 146 (ordinary interest rate deduction). Those interests next to Code 146 initially work on real estate income other than home ownership. Handy. By closing a loan on your own home, you reduce – in most cases you neutralize – the full property income from your apartment, store, …

Influence of the sixth state reform

With the sixth state reform, expenditure on own housing is under regional jurisdiction. One region may not take measures that affect the taxable basis.

High interest in your own home can not entitle you to ordinary interest payments because common interest income = intervention on gross income, and thus on taxable basis, and that is not allowed for the regions (they may not take measures that affect the taxable basis ). So ordinary interest deduction for your home loan can no longer be from 1/1/2014.

However, in the context of the standstill (ie for taxpayers who did not previously benefit from taxpayers), it has been decided that for the loans concluded until 31/12/2014, the interests of the home will no longer be eligible for ordinary interest deductions (ie Gross real estate income remains in your base and is not reduced) but give rise to tax deductions for ordinary interests. On the back of the scenes, calculation will be made of how many of your home equity interest rates previously would have reduced your net real income, but those interest rates will be converted to a tax reduction. A tax reduction at what rate? At the marginal rate.

Pay attention. The conversion in tax reduction is in principle only for loans concluded until 31/12/2014.

For loans closed from 1/1/2015 you can not apply ‘de truk’ (unless the regions decide otherwise). The interest of a non-mortgage loan in respect of your own property, therefore, will in principle not be eligible for ordinary interest deduction and also for conversion into tax deduction for contracts concluded from 1/1/2015.

Good news ! However, Flanders has now decided to retain the system of regional tax reduction for the ordinary interest in the home contract, as from 1/1/2015, but at the fixed rate of 40% (instead of the marginal rate as is the case for contracts closed before 1/1/2015)

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