“2023 Tax Return: Changes in Deductions for Interest on First Home Mortgage”

The 2023 tax return season is at the starting line, let’s find out the news on deductions for interest on the first home.

When making the tax return, it is also possible to deduct the interest paid on the mortgage of the first home during the previous year. However, the 730/2023 model provides for some changes concerning the compilation of the field dedicated to the aforementioned deduction.

Starting from 2 May 2023, it will be possible to complete the 730 form for the current year. Taxpayers will have the opportunity to present the tax return income until October 2nd. However, those who use the pre-compiled form, present on the Revenue Agency portal, will have a longer time frame to present the document. In fact, for this last category of citizens the window will be closed in November.

In the 2023 tax return, the deductions for interest expense on the loan taken out for the purchase of the first home. This is nothing new, however this year there is a change regarding the compilation of the field dedicated to the interest expense on the mortgage.

Better to know about this change to avoid mistakes, especially if you opt for the pre-compiled template.

Income tax return 2023: where do you put the interest expense on the mortgage?

When filling out the 2023 tax return, it is important to know that there is something new regarding the interest expense on the loan taken out for the purchase of a first home. Although this type of deduction is not a new entry, the novelty concerns the field to fill in.

If until last year this item had to be inserted in a single column, today it is necessary to complete line E7 composed from two separate columns.

But which of the two columns should be filled in? Before finding out exactly how to include this item in the 730 model, it should be remembered that the deduction of interest paid on mortgages is permitted by article 15 of Presidential Decree 917/86.

In essence, it is possible to obtain a 19% deduction on the interest expense paid on the following types of mortgages:

• main residence;
• entered into before 1993 on properties other than the main residence;
• loans contracted in 1997 to carry out maintenance, restoration and renovation works on buildings used as main residences;
• mortgage loans entered into starting from 1998 for the reconstruction and building renovation of buildings used and principal repetition;
• mortgage loans in degrees of all kinds.

Ancillary charges may also be deducted. In any case, when filling out the tax return of model 730/2023 it is important indicate the interest payable in line E7. This consists of two distinct columns and is the real novelty for 2023.

The relative amounts must be entered in the first column to loan agreements entered into by 12/31/2021. In column two, on the other hand, it is necessary to report the amounts paid in 2022 and, therefore, those relating to the loan agreements entered into starting from 1 January 2022.

The regulations provide for the possibility of obtaining a deduction equal to 19% up to a maximum amount of €4000.

The deduction is recognized provided that the property is used as a main residence within one year of signing the purchase contract. If the property in question has undergone renovation, the discipline provides that it is used as a principal residence within two years of purchase.

If, on the other hand, the purchased property is leased, the deduction is due starting from the first mortgage installment paid. However, the law requires that the buyer notify the lessee within three months of signing the purchase contract statement of extract for the end of the lease. Furthermore, within one year of the purchase contract, the property must be used as a main residence.