Are your mortgage closing costs tax-deductable?

Notary costs (nota van afrekening)

When buying a house, you will not be able to avoid visiting a notary. You also will not be able to escape some additional costs in order to officially become a homeowner. The notary invoice will reflect certain costs, which unfortunately are not all deductible. Only costs that were made based on what was needed to close the mortgage are deductible. Often, the notary invoice will not be enough, but a separate specified invoice will be needed when filing your taxes.

Taxation / Appraisal (taxatiekosten / makelaarskosten)

Often reflected in the notary invoice are the appraisal costs (taxatiekosten). These costs are only deductible if they were made to close the mortgage and are non-deductible if they were made only for the valuation of the house. For these costs, a separate invoice is needed since a third party is often involved. The invoice should also specifically mention that the appraisal costs were made in relation to the mortgage.

Translation costs (tolkkosten)

When buying a house in the Netherlands as an international, it is often really hard to understand and read everything as carefully as you should. A solution for this is to hire someone who will translate certain documents for you. You might need this person to help you with the translation of the purchase of the house and for closing the mortgage.

It’s a good idea to ask this person to provide you with a specified invoice, since the full amount will not always be deductible for the income tax filing. Only costs made in relation to closing the mortgage are deductible and the costs that were made for the purchase of the house are not. Hence why the invoice should specifically mention which costs were made for the mortgage.

Mortgage interest

When you have an annuity or linear mortgage for your own residential house, currently, the mortgage interest is still deductible in the income tax filing and can result in tax relief. The mortgage paid for a house that is not your residential house will not be deductible, as this house will be seen as an investment. The amount of mortgage you have paid throughout the tax year should be mentioned in your annual overview of your mortgage provider. The date of the December 31 of the concerning tax year will mention which amount has been paid.

Refinancing the mortgage

The mortgage loan is agreed upon for a long duration, and you have to pay monthly for the mortgage. The mortgage interest can change during the year, because of the mortgage interest rates. After closing the mortgage and paying the monthly mortgage costs (including the interest), you have the possibility to refinance the mortgage.

If you have had the mortgage for a few years, your interest is likely locked at a higher interest rate than the current rate. For refinancing the mortgage, you probably have to pay a penalty, since you are changing the mortgage loan. If you paid the fine directly, without a loan, then these are most likely deductible in the income tax filing.

Provisional income tax filing 2022

If you become a homeowner in 2022, then there is a possibility to file a provisional income tax filing for the year 2022, instead of waiting to declare your mortgage costs when you can file your regular income tax return, at the beginning of 2023. With the provisional income tax filing, you will receive the entitled monthly tax return during the tax year in instalments. When you file this way, it is possible to deduct the mortgage interest you expect to pay during the year and the costs made in regard to the mortgage.

Please note that filing a provisional income tax return does not mean that you do not have to file the regular income tax filing at the beginning of 2023. With the regular income tax filing, the estimated refund will be checked. This can result in, for example, an additional amount to receive or to pay, which will be reflected eventually in the final decision letter.