Calculating mortgage deduction: an example
Let’s say the mortgage and WOZ (asset value) figure of your house is € 300,000. At an interest rate of 2%, this means an annual mortgage interest rate of € 6,000.
Your notional rental value or eigenwoningforfait is the tax you pay for owning your own home. This is an additional tax rate on top of your income, and will be 0.45% of the WOZ value in 2022. In this example, this is €1,350.*
And suppose your income is € 65,000 gross per year. To calculate your taxable income, you subtract your mortgage interest from this and add your notional rental value back to this. In this example, your taxable income is therefore: € 65,000 – € 6,000 + € 1,350 = € 60,350
Your employer has (if all is well) withheld income tax, and has not taken into account the fact that you have your own home.
The amount on which you have paid too much income tax is € 65,000 – € 60,350 = € 4,650.
You will receive a percentage back on this. How much that is, depends on the income bracket in which you pay tax:
|Tax bracket 1:
||Tax bracket 2:
|Gross income per year up to €69,398 (2022)
||Gross income per year from €69,398 (2022)
|Mortgage interest deduction: 37.03%
||Mortgage interest deduction: 40%
Please note: as of 2023 the maximum amount will be reduced to 37% for all tax brackets
In this example, the amount that you will receive back from the tax authorities (in 2022) is € 4,650 x 37.03% = € 1,721.89.
Do you have a tax partner? Then you can choose how to divide this on your tax return.
* Is your WOZ value above €1,110,000? Then the notional rental value is €4,995 (0.45% x €1,110,000) + 2.35% of the WOZ value above €1,110,000 (in 2022).