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Is interest from a secondary loan deductable per the mortgage deduction?

Question:

I am about to purchase a property in the Netherlands and as an expat am expected to provide a deposit of 10% of the purchase value. I am doing so by way of a personal loan from my bank in my home country and am hoping that the interest on this loan will also be deductible for tax purposes. Are there rules surrounding the sources of financing entitled to be deducted?

Answer:

Dutch law just states that interest on a loan used to purchase or renovate the main residence is deductible. It doesn‘t say how the loan should be set up. It doesn‘t therefore have to be a mortgage. A mortgage is just a loan with the property as the guarantee. But you can also just get a personal loan from a bank, or a loan from a family member or any other person or organisation. 

Just make sure that the loan is arranged for the main residence. 


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Comments (3)
Comment by picolo on Wed, Nov 2nd, 2016 at 12:30 AM
i have a loan from my family so if i understand i can ask for the deduction, possible? what can i ask for dedution? you need to provide document for this debt?
Comment by vincent on Wed, Nov 2nd, 2016 at 3:54 PM
Hi Arjan, i was given some money from my parents to help me buying a property here. How can i switch that to a loan in order to get the interest back? what do you have to show to show it was a loan instead of a gift? tanks
Comment by Arjan Enneman on Fri, Dec 30th, 2016 at 3:35 PM
You need to prove that there is a loan and that you actually pay interest. This can be done with a signed loan agreement. Payments can be proven by showing bank statements. So only actually paid interest amounts can be deducted. After you have paid the interest to your family they can give the interest back to you if they don‘t want you to pay interest. This can be done under the gift tax exemption (which depends on the family relation). But that‘s up to how you set up the loan agreement.
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