If you wish to claim a tax deduction for the interest on a mortgage on your own home in your income tax return, the mortgage must meet a number of conditions. You must also provide the correct details to the tax authorities on time.
Administrative Officer
If you borrow money from a so-called “party subject to reporting requirements”, the borrower must provide the relevant details to the Tax and Customs Administration. The tax authorities use this information to check whether you have met the repayment requirement. This requirement applies to home loans taken out on or after 1 January 2013.
All professional financial institutions are required to keep records. If you borrow from such an institution, you will generally find the details of your loan included in the information pre-filled by the Tax and Customs Administration on your tax return.
Another borrower
If you borrow money from a family member or your own private limited company, the borrower is not required to keep records. In that case, you must provide the correct information to the tax authorities yourself in good time. You do this by including this information in your income tax return.
It was recently decided that Arnhem-Leeuwarden Court of Appeal ‘On time’ means that you must have the information by the time the final tax assessment becomes final. A tax assessment becomes final when the period for lodging an objection has expired without any objection having been lodged.
Reduction by the authorities
The case concerns a woman who bought her own home in 2014. The purchase was financed by two loans: one from ABN Amro and one from her father. In her 2016 income tax return, this woman did declare the loan from ABN Amro, but not the one from her father.
The Tax and Customs Administration will issue the tax assessment for 2016 in accordance with the tax return. When the lady realises that she has not deducted the interest on her father’s loan, she will ask the Tax and Customs Administration to reduce this assessment of its own accord.
The Tax and Customs Administration has refused to grant this request, on the grounds that the details of the loan were provided too late. The Court of Appeal has upheld this decision. The details of the loan should have been provided to the Tax and Customs Administration by the last day of the objection period at the latest. Compliance with the obligation to provide information in a timely manner is a condition for the deduction of interest. The Tax and Customs Administration was therefore right to refuse this deduction.