Mortgage interest deduction: how your tax benefit works | Libero Financieel
Taking out a mortgage costs money, but it also pays off: the hypotheekrenteaftrek (mortgage interest deduction). Paying mortgage interest? Then, under certain conditions, you can get part of it back from the Dutch Tax Administration (Belastingdienst). We explain how it works, how much you get back and what to keep in mind.
What is mortgage interest deduction?
Mortgage interest deduction is a tax scheme that lets you deduct the interest you pay on your home loan (eigenwoningschuld) from your taxable income in box 1. As a result, you pay less income tax. The deduction only applies to the property where you actually live, your main residence. A second home or buy-to-let property doesn't qualify for mortgage interest deduction.
You don't need to submit a separate application for mortgage interest deduction. You report the interest you paid in your annual tax return, or you request a provisional refund so you receive the benefit monthly instead of all at once afterwards.
How much mortgage interest do I get back?
How much you get back exactly depends on your income. In 2026, the following maximum deduction rates apply:
| Deduction rate in 2026 | |
| Income in the first tax bracket | 35.75% |
| Income in the second tax bracket | 37.56% |
| Income in the highest tax bracket (49.5%) | Capped at 37.56% |
Even if part of your income falls into the highest tax bracket, mortgage interest deduction is capped at the rate listed above. So you don't get the interest back at 49.5%. This is the result of the gradual phase-down of mortgage interest deduction that started in 2020.
Calculating your mortgage interest deduction: an example. Say you have a € 350,000 mortgage with a 4% interest rate. On an annual basis, that means you pay € 14,000 in mortgage interest. If you fall into the second tax bracket, you calculate with a deduction rate of 37.56%. Your tax benefit then comes to roughly € 5,258. The eigenwoningforfait (notional rental value addition) still needs to be subtracted from this, as explained below. This shows how mortgage interest deduction concretely lowers your net mortgage costs.
The eigenwoningforfait: the other side of your tax benefit
Mortgage interest deduction is offset by the eigenwoningforfait (notional rental value addition). The Belastingdienst assumes that owning a home provides a financial benefit. That's why a small percentage of the official property value (WOZ-waarde) is added to your taxable income. This is called the eigenwoningforfait. In 2026, the eigenwoningforfait is 0.35% of your property's WOZ value, up to a value of roughly € 1,340,000. Above that, a higher rate of 2.35% applies, also known as the "villa tax".
On balance, the eigenwoningforfait always reduces your deduction. Have you (almost) paid off your mortgage, and is the interest you pay lower than the eigenwoningforfait? Then the Wet Hillen compensates part of that difference. This compensation has been phased down step by step since 2019, meaning homeowners with a nearly paid-off mortgage retain slightly less benefit each year.
Conditions for mortgage interest deduction
- Main residence: the interest is only deductible for the property you actually live in, not a second home or buy-to-let property.
- Repayment type: did you take out your mortgage after 1 January 2013? Then you're only entitled to interest deduction if you repay it on an annuity or linear basis. An interest-only mortgage (aflossingsvrije hypotheek) taken out after 2013 doesn't qualify for interest deduction.
- Maximum term: interest deduction applies for a maximum of 30 years per loan.
- Loan for your own home: the loan must have been used to buy, improve or maintain your home.
- Proof: you must be able to demonstrate the loan and its purpose, for example with a mortgage deed and invoices.
- Spending on extra borrowing: borrowing extra for, say, a renovation? Then that money must actually have been spent on the home to qualify for interest deduction.
How do you claim mortgage interest deduction?
You don't need to submit a separate application. There are two ways to receive the benefit:
- Via your annual tax return: you report the mortgage interest you paid, and the Belastingdienst settles the benefit or pays it out as a refund.
- Via a provisional refund: you request this from the Belastingdienst, after which you receive the calculated benefit in your account every month. Useful if you want to use the refund directly for your monthly costs.
Frequently asked questions about mortgage interest deduction
What percentage of mortgage interest deduction do I get in 2026?
The maximum deduction rate in 2026 is 37.56%, tied to the rate of the second tax bracket. If you fall entirely within the first bracket, 35.75% applies. If you fall into the highest bracket, the deduction remains capped at 37.56%.
Do I also get interest deduction with an interest-only mortgage?
For mortgages taken out after 1 January 2013, interest deduction only applies if you repay on an annuity or linear basis within a maximum of 30 years. An interest-only mortgage (aflossingsvrije hypotheek) taken out after 2013 doesn't qualify for mortgage interest deduction.
Do I also get mortgage interest deduction on a second home?
No. A holiday home or buy-to-let property falls under box 3, not box 1. Mortgage interest deduction only applies to the property that is your main residence.
What's the difference between mortgage interest deduction and the eigenwoningforfait?
Mortgage interest deduction lowers your taxable income. The eigenwoningforfait raises it instead, because you're assumed to have income from owning your home. On balance, you first deduct the interest and then add the eigenwoningforfait back.
Can I have mortgage interest deduction paid out monthly?
Yes, via a provisional refund from the Belastingdienst. You then receive the calculated tax benefit in your account every month, instead of all at once afterwards with your annual tax return.
What happens to mortgage interest deduction once I've (almost) paid off my mortgage?
If you pay little or no mortgage interest anymore, the eigenwoningforfait can end up higher than your deductible interest. The Wet Hillen compensates part of that difference, but this scheme is being phased down further every year. Over time, this means you'll pay more tax on your home.
We calculate your tax benefit for you
Mortgage interest deduction is a welcome bonus, but it doesn't make choosing the right mortgage type and repayment method any simpler. We look together with you at what the deduction and the eigenwoningforfait mean for your net monthly costs, now and in the future.
Find out what your net monthly costs will be Plan a free mortgage conversation