Selling your house in times of crisis is not an easy task. That is why many homeowners have problems with the sale of the old home if they have already bought a new home. You see this, for example, with couples who start living together and therefore sell the house of one of the two. But also with people who want to live cheaper or, on the contrary, larger because of family expansion. Can you use a double mortgage interest deduction in these situations?
Double mortgage interest deduction
In principle, the rule applies that the mortgage interest deduction only applies to the home in which you actually live. So if there is a house empty that has not yet been sold or if you have a holiday home, the mortgage interest deduction does not apply to these houses. Even if you still live in your old house and have already taken out a mortgage for the construction of a new house, the mortgage interest deduction only applies to the house in which you live.
Double mortgage interest deduction for 3 years
But to accommodate homeowners and to stimulate the housing market, the government broadened these rules a few years ago. Since 2008 you can still use double mortgage interest deduction for three years. The double mortgage interest deduction expires after these three years.
Double mortgage interest deduction on rental
If you are considering renting out the vacant property in order to reduce costs, it is important that you consider carefully whether this is actually more economical. In that case, you may no longer use the double deduction for the mortgage because the house falls from that moment in box 3. Normally your owner-occupied home falls into box 1, which makes mortgage interest deduction possible.
In box 3 you pay capital gains tax on the value of the home. This costs a considerable amount every year and the income from rent must be outweighed by this. Fortunately, you do not pay tax on rental income if you rent the property under the Leegstandswet. And as soon as the rent ends, the house falls back into box 1 and you can deduct the double mortgage interest again if you still fall within the term.
Double mortgage – Remaining debt
If it is so difficult to sell your property, sometimes the only solution is to drop the price considerably. Certainly if you are no longer entitled to a double mortgage interest deduction, the financial consequences will increase considerably. Many homeowners therefore have to settle for a residual debt if the housing market is poor. If you are confronted with this, it is good to know that the interest on the residual debt is still deductible for 10 years.