Table of Contents
The government is increasing the mortgage interest deduction for higher incomes, in contrast to the earlier phasing out of this deduction since 2013. Professor of public sector economics Raymond Gradus calls on the Senate in an article in the economists’ magazine ESB to reverse the increase in the mortgage interest deduction.
The 2025 Tax Plan introduces the option for higher income earners to deduct mortgage interest at a higher rate, resulting in a higher deduction than for lower income earners.
Since 2014, the mortgage interest deduction rate has been reduced by 0.5 percentage points annually to prevent over-borrowing at higher incomes. In 2023, this led to a flat tax rate of approximately 37 percent for most taxpayers. However, the 2025 Tax Plan changes this course and increases the deduction for higher incomes. This step appears to contradict previous agreements to make the owner-occupied housing market more accessible.
Housing market
The increased mortgage interest deduction would stimulate demand in the housing market, which has been criticized because of an already overheated market that makes purchasing a home difficult for many middle-income earners. The Senate is called on to adjust the Tax Plan so that the mortgage interest deduction remains the same for all incomes. Failure to comply with these agreements could possibly result in the blocking of funds from the EU and is at odds with previous commitments.
Thirty-year term
In addition, the Netherlands is approaching the limit of the thirty-year period within which mortgage interest may be deducted, something that the Tax Authorities cannot effectively monitor due to missing administration. It is known that the Tax Authorities cannot monitor and enforce the thirty-year period at all because no administration has been built up (SEO, 2019). Since 2019, many official memos have called for phasing out mortgage interest. So far, politicians have ignored this call. It is important that the Senate takes on its role as a critical guardian of consistent legislation and encourages the cabinet to develop a long-term vision with regard to mortgage interest deduction, according to Gradus.
Bron: ESB, 25 november 2024
Masterclass in the Home Ownership Scheme
In recent years, the tax legislation and regulations governing the home ownership scheme have been changed on various points. Some regulations are far from understandable and difficult to implement. Particularly if partners buy a home together and have a mortgage history. The new matrimonial property law also plays a major role in the composition of the new mortgage construction and the consequences of this if partners separate.
More information and registration
**Considering the potential for over-borrowing and its possible impact on market stability, what specific policy measures could mitigate the risks associated with this change to the mortgage interest deduction?**
## Interview: Mortgage Interest Deduction Increase – A Step Backwards?
**Introduction:**
Welcome to World-Today-News.com. Today, we’re diving into the controversial issue of the Dutch government’s decision to increase the mortgage interest deduction for higher-income earners, a move that contradicts previous efforts to make homeownership more accessible. We’re joined by two esteemed experts: Professor Raymond Gradus, a leading voice in public sector economics, and Ms. Anneke van der Helm, a housing market analyst with extensive experience in analyzing policy impacts.
**Section 1: Reversing Course on Accessibility:**
* Professor Gradus, your article in ESB criticizes the government’s increase in the mortgage interest deduction for higher earners. Can you elaborate on why this decision seems to contradict previous efforts to make the housing market more accessible?
* Ms. van der Helm, what is the current state of the Dutch housing market? Do you see this policy change exacerbating existing challenges for middle-income earners?
**Section 2: The Impact on Market Dynamics:**
* Professor Gradus, the article mentions concerns about over-borrowing at higher incomes. Could you explain the potential consequences of this increased deduction on borrowing habits and overall market stability?
* Ms. van der Helm, how do you see this change influencing housing prices and demand, especially in already competitive markets?
**Section 3: Long-Term Vision and EU Implications:**
* Professor Gradus, your call for a long-term vision regarding mortgage interest deductions highlights the complexities of this issue. What kind of framework do you envision for a sustainable and equitable housing market?
* Ms. Van der helm, the article mentions potential conflicts with EU funding. Could you elaborate on these concerns and the broader implications of departing from previous agreements?
**Section 4: The 30-Year Term and Effective Monitoring:**
* Professor Gradus, the article points out the shortcomings in monitoring the 30-year mortgage interest deduction period. How critical is the lack of effective oversight, and what steps should be taken to address this issue?
**Closing:**
The decision to increase the mortgage interest deduction for higher earners has sparked considerable debate. We’ve heard valuable insights from Professor Gradus and Ms. van der Helm, shedding light on the multifaceted nature of this policy. As the discussion continues, it’s crucial to consider the long-term consequences for both the housing market and broader economic and social equity in the Netherlands.
Thank you both for sharing your expertise with us.
